Outlook & Valuation
We expect LPC’s US biz to remain weak led by price erosion, increase in competition to its Metformin franchise and lack of any new launches, which will lead to overall decline in sales and profitability. With the issue of WL to its strategic units, we see further downside risk to its US business, which would eventually lead to absence of new launches, product concentration risk and lower returns ratios. We expect ~25-30 approvals to get impacted in FY18E/19E due to this WL, which would have significant material impact on LPC’s earnings. Rolling over our estimates to FY20E, we maintain our HOLD recommendation on the stock with a revised Target Price of Rs875 (from Rs820 earlier), valuing the stock at 18x FY20E EPS of Rs48.6.