Lupin Limited — Q1 FY26 earnings call

Call held 6 Aug 2025

Management summary

Lupin reported a strong Q1 FY26 with double-digit revenue growth and significant EBITDA margin expansion to 26.6%, driven by robust US performance, including the successful launch of Tolvaptan, and solid growth in India and Other Developed Markets. The company continues to invest heavily in R&D, particularly in complex and specialty products, and is addressing regulatory observations at its Pithampur sites. While facing some headwinds from LOE in India and generic competition in the US, management remains optimistic about future growth from its pipeline and strategic initiatives.

Highlights

  • Sales for Q1 FY26 came in at INR 6,164 crores, a growth of 11.8% YoY.

  • EBITDA margin expanded by 330 basis points YoY to 26.6%.

  • US business recorded sales of USD 282 million, its highest since Q4 FY2017.

  • Successful launch of Tolvaptan with sole first-to-file exclusivity.

  • Recent FDA approvals for generic Victoza® and Glucagon.

Concerns

  • R&D investment increased by 151 basis points, impacting current profitability.

  • LOE on certain in-licensed brands in the Diabetes segment negatively impacted India growth rates.

  • Observations were issued in 483 for Pithampur Unit-2 and Unit-3 sites.

  • Adjacency businesses are currently loss-making, causing a ~1% drag on EBITDA.

  • Patient recruitment for NaMuscla® Phase 3 study has been slow.

Key financials

  1. Sales ₹6,164 Cr +11.8%YoY
  2. EBITDA ₹1,641 Cr +27.6%YoY
  3. EBITDA Margin 26.6%
  4. R&D Expense ₹484 Cr
  5. R&D as % of Sales 7.9%
  6. Other Operating Income ₹105 Cr
  7. Gross Margins 71.3%
  8. Employee Benefit Expenses ₹1,083 Cr +11.5%YoY
  9. Manufacturing & Other Expenses ₹1,772 Cr +10.9%YoY
  10. ETR 13.7%
  11. Operating Working Capital ₹7,287 Cr
  12. Net Cash ₹1,239 Cr

What they filed

Q1 FY27: revenue up 25.6%, net profit up 27.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,106 4,208 4,486 5,709 4,068 −1%4,501 +7%5,235 +17%7,172 +26%
EBITDA1,115 1,411 1,746 2,730 1,176 +5%1,617 +15%2,282 +31%3,733 +37%
Net profit808 985 1,291 2,128 1,357 +68%717 −27%2,164 +68%2,715 +28%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • US Business
    282 Mn Sales
  • India Region
    7.8% Growth
  • India Formulations
    8.6% Growth
  • Other Developed Markets
    ₹775 Cr Revenue17% Growth
  • Europe
    28% Growth
  • Other Emerging Markets
    5.2% Growth
  • GIB Business
    16% Growth

Capital allocation

high confidence
  • Liquidity Cash ₹1,239 Cr Net cash at INR 1,239 crores as of June 30, 2025, compared to INR 310 crores on March 31, 2025.
    Net cash at INR 1,239 crores as against INR 310 crores on 31 March 2025.

Guidance & targets

Profitability

  • EBITDA margin Profitability · fiscal year · High confidence 24% to 25%
    and reaffirm our EBITDA margin outlook for the fiscal year at 24% to 25%.

    — Vinita Gupta

  • EBITDA margins Profitability · full-year · High confidence 24% to 25%
    As previously guided, we expect full-year EBITDA margins to be in the range of 24% to 25%.

    — Ramesh Swaminathan

R&D

  • R&D spend as % of sales R&D · FY26 · High confidence 7.5% to 8.5%
    and we anticipate R&D spend to be between 7.5% to 8.5% level in FY26.

    — Vinita Gupta

Tax

  • ETR Tax · full year · High confidence around 19%
    However, for the full year, we expect the ETR to be around 19%.

    — Ramesh Swaminathan

Revenue

  • Overall top-line growth Revenue · the year · High confidence strong double-digit
    So top-line growth for the year, as we have guided earlier, we expect strong double-digit, both for the company and for the U.S.

    — Vinita Gupta

Growth

  • Company growth Growth · next fiscal year (FY27) · Medium confidence high single-digit, hopefully double-digit
    Certainly, for the company overall, we expect a high single-digit growth for the next fiscal year, and hopefully double-digit as well based on the efforts our team has undertaken.

    — Ramesh Swaminathan

Product Launch

  • Pegfilgrastim filing Product Launch · this fiscal year · High confidence file this during this fiscal year
    Although the Pegfilgrastim approval will come sooner, we hope to file this during this fiscal year.

    — Nilesh Gupta

  • NaMuscla® launch in US Product Launch · FY29 · High confidence FY29
    We expect that the product will launch in the U.S in FY29.

    — Vinita Gupta

  • Liraglutide launch Product Launch · October · High confidence by October
    So, we have launched Glucagon yesterday and plan to launch Liraglutide by October

    — Vinita Gupta

  • Dulera launch in US Product Launch · H2 FY27 or early FY28 · High confidence H2 FY27 or early FY28
    And hopefully, by the second half of FY27 or early FY28, we should be in the market with Dulera.

    — Vinita Gupta

  • Semaglutide (oral solid) in India Product Launch · next fiscal · Medium confidence later, hopefully in the next fiscal
    The oral solid is what we're developing internally. That will come a little later, hopefully in the next fiscal.

    — Nilesh Gupta

  • Semaglutide (injectable) in India Product Launch · end of FY26 · High confidence end of FY26
    Yes, FY27 for the oral, end of FY26 for the injectable.

    — Nilesh Gupta

Market Opportunity

  • NaMuscla® market opportunity Market Opportunity · High confidence USD 100 million to USD 200 million
    We believe that there's a market opportunity between USD 100 million to USD 200 million.

    — Vinita Gupta

Market Share

  • Tolvaptan market share Market Share · High confidence about 25%
    I think you had mentioned that based on contracts that we have in place, we should be able to get to about 25% market share on Tolvaptan.

    — Neha Manpuria

Product Approval

  • Risperdal Consta® goal date Product Approval · September · High confidence September
    We have a goal date for Risperdal Consta® in September.

    — Vinita Gupta

Business Performance

  • Diagnostics business breakeven Business Performance · next year · High confidence next year
    For example, the diagnostics business is expected to kind of breakeven next year.

    — Ramesh Swaminathan

What to watch in Q2 FY26

Pithampur Unit-2 and Unit-3 483 observations resolution

next quarter
Current Observations issued
Target Resolution/EIR

Why it matters

Regulatory compliance is crucial for manufacturing and new approvals, impacting overall operational stability.

We are confident of addressing the observations effectively and would like to reiterate that we are committed to ensure that all our sites are fully compliant with the FDA and other regulatory agencies around the world.

Risks & concerns

  • Generic competition in Albuterol

    medium

    Anticipated impact of new generic competition in Albuterol.

    Management acknowledged

  • LOE on certain in-licensed brands in Diabetes segment

    medium

    Had a negative impact on India growth rates.

    Management acknowledged

  • Observations in 483 issued for Pithampur Unit-2 and Unit-3 sites

    medium

    Management is confident of addressing the observations effectively.

    Management acknowledged

  • Potential tariffs on generic pharmaceuticals

    medium

    Mitigation strategies include price increases, tech transfer to US sites, and IP transfers; manageable if tariffs are 10-15%.

    Analyst acknowledged

  • Mirabegron patent litigation outcome and competition

    medium

    Multiple scenarios can emerge depending on litigation outcomes and competitor trials.

    Management acknowledged

  • Adjacency businesses are loss-making

    low

    Causing a ~1% drag on EBITDA, but expected to evolve and become profitable.

    Management acknowledged

  • Slow patient recruitment for NaMuscla® Phase 3 study

    low

    Patient recruitment has been slow, and the company is looking to open new centers.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Tolvaptan contribution and overall top-line growth outlook Direct
So top-line growth for the year, as we have guided earlier, we expect strong double-digit, both for the company and for the U.S. We launched Tolvaptan in late May. So, it was partial quarter.

Clarifies the partial contribution of Tolvaptan in Q1 and reiterates strong double-digit growth guidance for the full year.

Asked by Kunal Dhamesha

India business growth and drag from adjacency businesses Direct
It's primarily the tender business, it's the institution business, which has impacted. And as we've discussed before, that's lumpy. But by and large, I think we're in a good place on the Global Institution Business as well. ... So, the impact on our EBITDA would be close to about 1%. They are still evolving and coming up very nicely. So, the long term obviously looks very alluring to us. But clearly, they're still loss-making at this stage.

Explains the reasons for lower India growth (lumpy tender business) and quantifies the EBITDA drag from new, loss-making adjacency businesses.

Asked by Kunal Dhamesha

US sales outlook for FY27, given potential cliff effects from Tolvaptan/Mirabegron Partial
So, while in some of the exclusive products, we will have additional competition impact, we think that some of the products are stickier than others. We remain very optimistic about growth prospects. Certainly, for the company overall, we expect a high single-digit growth for the next fiscal year, and hopefully double-digit as well based on the efforts our team has undertaken.

Addresses concerns about sustainability of US growth post-exclusivity, highlighting pipeline and overall company growth targets for FY27.

Asked by Vivek Agrawal

Impact of potential tariffs on generic pharmaceuticals Direct
So, a combination of all of those measures, we expect to be able to mitigate a good percentage of the impact of tariffs. If it is 10%, 15%, I think it should be fairly manageable in any case.

Addresses a macro-economic risk, outlining mitigation strategies like price increases, tech transfer to US sites, and IP transfers.

Asked by Saion Mukherjee

Strategy for building specialty business in the US Direct
Strategically, our focus has really been in niche therapy areas where we can really add value. So, areas like respiratory, and niche respiratory products or products that are not large in Asthma-COPD where we compete with big pharma. Plus, rare neurology products like NaMuscla®, we're actively developing NaMuscla® for the U.S.

Clarifies the company's strategic focus within the specialty segment, emphasizing niche areas over large-volume products.

Asked by Saion Mukherjee

Liraglutide market attractiveness in the US given new-generation therapies Direct
We believe it is attractive because it's half a billion dollars plus, and there are very limited number of players right now. As the product gets more affordable with additional competition, we would expect that there is some share that the product should take from the overall class. Definitely the portion that is price sensitive.

Provides rationale for pursuing Liraglutide despite newer GLP-1s, citing market size and limited competition.

Asked by Damayanti Kerai

Tiotropium market share gain, especially in Medicare/Medicaid Direct
But the Medicare - Medicaid is where we are starting to see some benefits, but it's not showing in the numbers as of yet. But we hope that in the next couple of quarters that builds up.

Highlights challenges and ongoing efforts to gain market share in specific payer segments for Tiotropium.

Asked by Damayanti Kerai

Dulera CRL and its nature Evasive
We do not want to talk about that.

Management's refusal to discuss the nature of the CRL for Dulera could signal sensitivity or ongoing issues.

Asked by Kunal Dhamesha

3 min read 6 chapters

Detailed narrative

Strong Q1 FY26 Performance and Margin Expansion

Lupin commenced FY26 with robust financial results, achieving double-digit growth in both revenues and profitability. The company reported sales of INR 6,164 crores, an 11.8% increase year-over-year from INR 5,514 crores in Q1 FY25. EBITDA (excluding Forex and other income) rose by 27.6% YoY to INR 1,641 crores, leading to a significant EBITDA margin expansion of 330 basis points YoY, reaching 26.6% for the quarter. Gross margins also improved by 290 basis points YoY to 71.3%, driven by a better product mix and cost efficiencies.

US Business Milestones and Strategic Launches

The US business achieved its highest revenues since Q4 FY2017, recording USD 282 million, a 22.3% YoY and 12.8% QoQ growth on a constant currency basis. This was primarily driven by the successful launch of Tolvaptan with sole first-to-file exclusivity in late May, which contributed partially to the quarter's results. Management expects Tolvaptan to achieve approximately 25% market share by the end of Q2 or Q3 FY26. Additionally, Lupin secured FDA approvals for generic Victoza® and Glucagon, with Liraglutide planned for an October launch and Risperdal Consta® expected to be approved in September.

India and Other Developed Markets Show Solid Growth

The India region demonstrated a 7.8% YoY growth, with the India Formulations business growing 8.6%, aligning with IPM growth. The chronic share of the India business increased to 65% from 64% last year, despite a negative impact from Loss of Exclusivity (LOE) on certain in-licensed diabetes brands. Other Developed Markets grew 17% YoY to INR 775 crores, with Europe being a key driver, increasing by an impressive 28% YoY. These markets now constitute 13% of total sales, up from 11% two years ago, reflecting sustained momentum.

Intensified R&D Focus on Complex and Specialty Products

Lupin's R&D expenses stood at INR 484 crores, representing 7.9% of sales, a 151 basis point increase YoY from 6.3% in Q1 FY25. A significant portion, approximately 70%, of R&D investments are directed towards complex and specialty products, including injectables, respiratory, biosimilars, and 505(b)(2) products. The company anticipates R&D spend to be between 7.5% and 8.5% of sales for the full FY26, underscoring its commitment to building a robust differentiated pipeline.

Regulatory Compliance and Operational Efficiencies

On the compliance front, Lupin received an EIR for its Nagpur Unit-2 site during the quarter. However, observations were noted in 483s issued for Pithampur Unit-2 and Unit-3 sites, which management is confident of addressing effectively. Operational efficiencies and a favorable product mix contributed to the 290 basis points YoY improvement in gross margins. Employee benefit expenses increased by 11.5% YoY to INR 1,083 crores, while manufacturing and other expenses rose by 10.9% YoY to INR 1,772 crores.

Strategic Pipeline and Future Growth Drivers

Lupin is actively expanding its specialty business organically and inorganically, with over 80 product launches planned for India over the next five years. The company's position in Inhalation is rapidly expanding across the US, India, and Europe. Biosimilars are emerging as a significant platform, with Pegfilgrastim expected to be filed this fiscal year and Ranibizumab having a goal date in June '26. The company is also actively developing NaMuscla® for rare neurology, with a US launch anticipated in FY29, targeting a market opportunity of USD 100 million to USD 200 million.

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