Lupin shares rise 1.3% after announcing business transfer agreement

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Shares of Lupin opened 1.3% higher on the NSE on September 12 after the company announced plans to enter into a business transfer agreement with its subsidiary Lupin Manufacturing Solutions (LMSL).

Under the agreement, Lupin will move two of its API manufacturing sites at Dabhasa and Visakhapatnam to the subsidiary. The company will also move select R&D operations, including fermentation, at Lupin Research Park, Pune.

The move is expected to generate Rs 750-850 crore for Lupin, which is subject to movement in working capital and other items. The agreement is expected to be finalized in October 2023.

Analysts at Geojit said that the move is a positive for Lupin as it will help the company to deleverage its balance sheet and improve its margins. They have retained their “hold” rating on the stock with a target price of Rs 1,142.

In Q1FY24, Lupin reported a 28.6% year-on-year increase in revenue to Rs 4,814 crore. Net profit for the quarter stood at Rs 453 crore against a net loss of Rs 87 crore in Q1FY23.

The company’s management has said that it is confident of achieving its growth targets for the year.

Here are some additional details about the business transfer agreement:

  • The agreement will be for a period of 10 years.
  • Lupin will continue to be the exclusive customer of LMSL for the APIs and R&D services that are being transferred.
  • LMSL will be a wholly-owned subsidiary of Lupin.

The business transfer agreement is a strategic move by Lupin to deleverage its balance sheet and improve its margins. The move is also expected to help the company to focus on its core businesses.


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