After a stupendous rally, the fundamentals of some companies are suggesting their shares have gained too much for their own good.
We are also skeptical of MM’s ability to deliver on its target of 15-20 per cent revenue and EPS CAGR over FY21-25.
Even after factoring in strong top-line growth and all-time high margins at SMP/SMR, our FY22-24 EPS is 13-23 per cent below consensus.
Lupin has three USFDA non-compliant facilities that are not generating enough asset turns, Goa facility was recently inspected and resulted in eight observations.
Its pricing power has weakened drastically which reflects in the 290 bps margin decline from 18.2% in FY13 to 15.3% in FY19, despite FY16 and FY19 seeing 19% YoY growth in domestic genset sales.