Lupin has delivered the goods this quarter.
When a pharmaceutical company beats estimates across revenue, margins, and profit in a single quarter, investors tend to sit up. When it does so by margins wide enough to force analysts to revise their numbers upward, the question shifts from “is this good?” to “is this sustainable?”
Lupin Limited just delivered that kind of quarter. The Nifty Pharma heavyweight posted Q3FY26 revenue of Rs 7,168 crore, up 24% year-on-year, with EBITDA surging 67% to Rs 2,262 crore. Margins hit 31.6% — a number that would have seemed fantastical just two years ago for a company long associated with pricing pressure and FDA remediation headaches.
The driver? A US business firing on all cylinders, powered by high-margin complex generics that competitors have struggled to replicate.
But here’s where it gets interesting. Axis Direct has slapped a buy rating with a target of Rs 2,460, implying meaningful upside. Nirmal Bang, looking at the same numbers, maintains a hold at Rs 2,394.
The US Story
Lupin’s US sales hit $350 million in the quarter, up a staggering 46% year-on-year. The star performers read like a roster of products that generic competitors have failed to crack: gTolvaptan, where Lupin commands roughly 35% market share; Mirabegron, a continued profit engine; and gRisperdal Consta, launched from the company’s Nanomi long-acting injectable platform.
“US outperforms,” Axis Direct notes in its report. “Sales stood at $350 Mn, driven by gTolvaptan contribution along with continued strength in gMirabegron and gSpiriva. Management indicated US performance was supported by new launches and seasonality, partially offset by low single-digit price erosion.”
The company currently holds approximately 40% share in both the generics segment and the overall molecule for its key products — dominance that translates directly to pricing power in a market notorious for commoditization.
Nirmal Bang acknowledges the strength: “US business remained strong, supported by key products such as Tolvaptan, Mirabegron, and the launch of gRisperdal Consta under CGT exclusivity. However, sustainability of current margin levels remains contingent on the pace of transition towards biosimilars and complex injectables as exclusivity-led opportunities gradually normalise.”
The Pipeline
What separates Lupin’s current rally from a typical generics sugar rush is the depth of its upcoming pipeline. The company isn’t merely riding existing products; it’s building infrastructure for the next decade.
The near-term catalyst is Pegfilgrastim, Lupin’s first US biosimilar, scheduled for launch in Q4FY26. Axis Direct highlights this as a pivotal moment: “The near-term trigger is the U.S. launch of Pegfilgrastim, marking its entry into U.S. biosimilars. Recent complex launches such as gRisperdal Consta continue to scale, reinforcing the shift toward high-barrier injectables.”
The numbers management is targeting are ambitious but grounded. “Over the next three years, the injectables and 505(b)(2) portfolio is targeted to exceed $100 Mn in annual revenues, supported by a growing institutional business,” Axis Direct reports. Tie-ups with McKesson and Amerisource are already resulting in favorable reimbursement dynamics.
Looking further out, the biosimilars roadmap includes bRanibizumab in FY27, followed by bAflibercept and bEtanercept in FY29-30. In respiratory, gDulera progression and planned advancement of Mepolizumab add optionality that doesn’t currently feature in most analyst models.
The Margin Question
Lupin has raised its FY26 EBITDA margin guidance to 27-28%, up from 25-26% previously. That’s confidence born of execution. But management has also indicated margins may moderate to 24-25% in FY27.
Axis Direct takes the optimistic view, emphasizing the structural shift in Lupin’s portfolio: “Strong gross margin expansion translated into a sharp EBITDA and PAT beat. Around 70% of R&D is now focused on complex assets including injectables, inhalation, and biosimilars.”
Nirmal Bang says: “While margins remain strong aided by a favourable product mix and operational efficiencies, sustainability will depend on the pace of ramp-up in biosimilars and complex injectables, especially with potential normalization in exclusivity-led opportunities over the medium term. EBITDA margins are expected to stabilize at approximately 26% by FY28E, though upside may be limited by continued investments in specialty and R&D.”
India and Emerging Markets
While the US grabbed headlines, Lupin’s India business grew a more modest 6% year-on-year to Rs 2,040 crore. The growth was driven by chronic therapies, with respiratory and cardiac segments continuing to outperform. It’s solid, if unspectacular — exactly what you’d expect from a mature domestic franchise.
Emerging markets told a stronger story. Nirmal Bang notes that “growth was driven by chronic therapies across Brazil and the Philippines, reflecting improved execution in branded generics.” The company’s GLP-1 ambitions in India target Rs 500-600 crore in sales from an estimated Rs 1,500 crore year-one market — meaningful but not transformational.
API revenues declined 24% year-on-year, a segment that has become strategically less important as Lupin pivots toward finished dosages with higher margins.
The Valuation Debate
Axis Direct values Lupin at 26x H1FY28 earnings, arriving at a target price of Rs 2,460 — up from its earlier Rs 2,400 target. The brokerage has raised its estimates post-quarter: revenue up 3-3.4% for FY26-27, EBITDA up 9.9-3.4%, and PAT up 11.4-1.4%.
Nirmal Bang takes a more conservative approach, valuing the stock at 22.2x December 2027 EPS of Rs 107.6, yielding a target of Rs 2,394. The lower multiple reflects “normalization of margins from elevated FY26 levels and moderation in return ratios, with ROCE and ROE expected to decline from peak levels as exclusivity-driven gains taper.”
