Commenting on the investment rationale, the stock broker said, "Lupin (LPC) reported upbeat Q4FY14 numbers, with adjusted PAT of Rs 5.97 billion (31%YoY), 5% ahead of estimated Rs 5.7 billion. Revenues grew in line at 21.5%YoY, led by strong growth in US generics (23% in USD terms), EU (20%), Japan (15% in YEN terms) and API (20%). EBITDA margins at 29.9% posted a sharp increase of 450 bps YoY on back of strong limited competition and FTF launches in US. Overall EBITDA margins in FY14 increased to 27.6% from 23.5% in FY13, led by currency benefits, improved mix, higher back-sourcing in Japan and cost optimization.

Going forward, we believe that while high-value FTFs may decline, core margins would benefit from recovery in India, incremental niche launches and operating leverage. We expect core margins (ex-FTF) to sustain 25-26% levels."

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