Lupin shares fall nearly 2% despite Q3 beat; Morgan Stanley reiterates ‘Equal-weight’

Shares of Lupin Limited opened nearly 2% down on Friday, February 13, after Morgan Stanley reiterated its ‘Equal-weight’ rating on the stock. The brokerage said Lupin delivered a strong Q3FY26 operational performance, led by the US and emerging markets.

Morgan Stanley set a target price of ₹2,221 on the stock, saying Lupin's revenue, EBITDA and adjusted profit (excluding one-offs) beat its estimates in the December quarter.

The company's revenue rose 24% year-on-year, while EBITDA and adjusted PAT jumped 67% and 77% YoY, respectively.

The brokerage firm highlighted strong growth in the US business, where sales rose 54% YoY and 13% sequentially, along with 42% YoY growth in emerging markets. It said the performance was driven by high-value products such as gJynarque, along with continued traction in gSpiriva.

Lupin reported Q3FY26 revenue of ₹7,167.5 crore, up 28% year-on-year and ahead of the Street estimate of ₹6,763.8 crore. EBITDA came in at ₹2,261.9 crore, up 87% YoY, but down 3.4% sequentially. EBITDA margin stood at 31.6%, sharply higher than 21.5% a year ago.

Net profit for the quarter was ₹1,180.5 crore, up 37% YoY, but down 20.5% QoQ and below the Street estimate of ₹1,246 crore.

Morgan Stanley said gross margin improved to 74%, up 364 basis points YoY and flat on a sequential basis. It attributed the improvement to a better product mix.

The company reported exceptional items of ₹4,26.57 crore, which included provisions for US litigation, a settlement related to gMyrbetriq, and the impact of labour codes. These were partly offset by settlement and arbitration gains.

Geographically, Lupin posted its highest-ever quarterly US sales at $350 million, well above the estimated $313–317 million range. The India business, which contributes 29% of revenue, grew 5.6% YoY to ₹2,038.7 crore. Other developed markets rose 10.8% YoY, while emerging markets grew 42.4% YoY to ₹917 crore.

Street sentiment remains positive. Of the 40 analysts tracked, about 70% have a ‘Buy’ rating, 22.5% recommend ‘Hold’, and 7.5% have ‘Sell’ calls. The consensus 12-month target price stands at ₹2,269.8, implying a return potential of about 2.23% from the current price of ₹2,219.30. The stock has delivered a 12-month return of about 8.2%.

The stock closed 0.46% higher ahead of Lupin's Q3 results announcement on Thursday. It has gained 11.53% in the past six months.