Financial Investment And Fundamental Pick For Lupin Ltd

In last quarter Lupin has also got the final approval of Nabumetone used for acute and chronic treatment from the department USFDA. The annual sale of the Nabumetone in US market was $66.80 million for the twelve months ended September 2010.

Lupin, with the presence of over 70 countries is engaged in development of APIs, generic, branded formulations and also the largest manufacturer of TB drugs in the world. Company provides wide range of products like treatment of Cephalosporins, CVS, central nervous system CNS, Anti-Asthma, Anti-TB, Diabetology, Dermatology, GI, and many more. Being a fastest growing top 10 Generics players in the two largest pharmaceutical markets of the world U.S and Japan Lupin has presence in Europe and other emerging countries.

Financials: Top Line and Bottom Line of Lupin grown at CAGR of 30% and 50% respectively in FY05-FY10. In FY10 the Consolidated Net Sales of Lupin rose by 30%% to Rs 4740.52 crore over FY09, Operating

Profit also surged by 33% to Rs 983.89 crore, PAT for the same period also jumped by 37% to Rs 699.67 crore over FY09. In Q3FY11 Consolidated Net Sales of the bank surged by 16.87%, Operating Profit & PAT also grew by 13.64% & 38.23% respectively while the OPM & PATM of Lupin for the same period were 20.26% & 15% respectively.

INVESTMENT GROUNDS
Industry Outline

Indian pharmaceutical industry in one of the fastest growing markets in the world and with the value of worth US$ 11bn India is also top exporting country in generic medicines. The generic drugs market valued US$ 20bn in India is expected to grow at a CAGR of around 16% during FY11-FY13. US generic market which has crossed US$ 80bn mark in 2010 is projected to grow at CAGR of around 10% during 20102013 while on the other hand with the value of US$ 75bn Japan is the second largest pharma market in the world and Japanese generic drugs market has also been witnessing positive developments for the past few years and reached US$ 8bn in 2010 and further expected to grow at CAGR of 9-10% during FY09 to Fy13.

Subsidiary likely to get the benefit from recent crises in Japan…

Lupin is likely to get the benefit from the recent calamity occurred in Japan. Actually Lupin's 100% subsidiary Kyowa Pharma operates in world's second-largest pharmaceutical market (Japan) with the portfolio of over 200 brands. Kyowa is one of the largest generic players in the Neurology segment with 95 products and covers 94% of psychiatry hospitals in Japan. Kyowa contributes 11% to the total revenue of the Lupin and recently a massive earthquake followed by devastating tsunami have created several health problems like gastrointestinal, post-traumatic care and infections, Kyowa which has variety of products for these kind of diseases and also a leader in the CNS segment might see the phenomenal demand for such drugs in near term.

Insured Revenue from New Drug Approvals, Agreements and Settlements…

In last quarter Lupin has also got the final approval of Nabumetone used for acute and chronic treatment from the department USFDA. The annual sale of the Nabumetone in US market was $66.80 million

for the twelve months ended September 2010. In US branded portfolio already forms 29% of US Turnover and so far in US Lupin has filled for the approval of 137 drugs and out of which 47 products approved

while in Europe out of 86 drugs 38 got the final approval. In US Lupin has also settled its ongoing litigations with Sunovion over Generic of Lunesta.

Phenomenal Growth in Overseas Markets in Q3FY11…

In quarter ended Dec 2010 Lupin has registered exceptional growth in developed countries like US and Europe. US, which forms branded portfolio 29% of US turnover and accounts 41% of overall revenue of Lupin's 41% is the 5th largest Generic player in terms of prescriptions. Its Generics business grew by 49% in US and 72% in Europe during the same quarter. In Europe it has launched some vital products and also got the approval for the same. Lupin's one of the products like Ceftiofur Ranked #1 and Cefpodoxime Proxetil has market share of 72% in France. In South African market with the growth of 37% in ZAR terms Lupin is sixth largest generic company.

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Turning Point Of Gold: Remain Bullish

January has been a tough month for gold. From its year-end 2010 price of $1,420 an ounce to its recent low just over $1,320, gold has lost some $100 - about seven percent.

On Wednesday, the World Gold Council published its annual Gold Investment Digest for the fourth quarter and full-year 2010 with some interesting insights.

According to the World Gold Council last year’s price performance was driven by developments in key gold markets:

• China saw increased investment activity, driven in part by innovative new gold investment vehicles offering improved access to the gold market.
• Jewelry consumption rebounded in India, the world’s largest gold market.
• Globally, investors remained concerned about uncertainty in the macro-economic environment and turned to gold to hedge against weakness in the US dollar and rising inflation in many economies.

We find the last point particularly interesting, as the USD Index finished the year slightly higher than was the case in 2009. However as we have observed, after 2006 things are much more complicated than simply USD up = gold down and vice-versa.

For the past two weeks we have experienced the risks that we might all face in 2011 and mentioned the problems caused by rising food prices and the social unrest they might unleash. We didn’t expect it to happen so soon.

After Tunisia’s revolution and the ouster of its president after 23 years of rule, Egypt seems to be next on the North African crisis list. One of the main grievances of the protesters in Egypt, just as it has been in Tunisia, has been the soaring price of food in the shops. The crisis and food shortages may spread to other Arab countries and no one knows where that can lead. We only know one thing—in times of crisis and uncertainty, people turn to gold for a safe haven.

The sentiment for the USD Index is short-term bullish which also has bullish implications for gold and silver. Recall that during the past few months, the USD has been leading the precious metals and here could very well ignite a turnaround for the metals.

In this daily short-term chart, we see that once again a cyclical turning point has come into play Summing up, gold appears bullish in the short-term; however the sentiment for the medium-term is mixed. Much depends on how the resistance levels hold the next short-term rally. If they hold and stop the uptrend, then it may very well be prudent to exit a portion of one's long-term positions.

Where will price of gold move in 2011 BY MANSUKH JANUARY 2011

There is no definitive answer to where the price of gold will be in 2011. The best an investor can do is to look at possibilities based on historical data. If an investor assumes that paper currency will continue its debasing trend, what would be a high estimate on gold prices per ounce? To answer that we need to look for the highest that gold has been in the past.

Indians were on a spending spree last year. But those who shopped for gold have reason to be satisfied with their purchase gold price has seen a 26 per cent rally this year! In rupee terms, gold prices have shot up by Rs 400/gram (Standard 24 carat gold), a 22 per cent run up. In contrast, stocks weren't a better play the benchmark Sensex is up just 15 per cent year-to-date.

January 21st, 1980 saw the price of gold reach 850 US dollars per ounce. To understand how much money this is worth today one would need to adjust the figures according to the Consumer Price Index. 850 dollars in 1980 is worth 2,250 US dollars in the year 2010. If gold were to repeat the value of a previous high it could double from the price it is trading at in December of 2010.

Other situation suggest that because the current economic output is many times greater than 30 years ago, the peak price of gold could even reach 3000 to 4000 dollars per ounce in the years to come. On the other hand the argument could be made that markets are based on mass psychology and trader emotions. Some might suggest that the average person would not believe that the price of gold could ever reach up to 3,000 dollars, thus creating a resistance to that level ever being achieved.

However some market participants believe that as the market recovers in 2011 and beyond, the price of gold will retreat dramatically as the economic woe gets pushed to the backs of people's minds and their hedging tactics are tossed aside. Longer term, the market could face headwinds that come with a sustained economic recovery as global interest rates could rise, denting the appeal of gold, a non-yield bearing asset. “The market is expected to derive strength from further economic pitfalls and the near-zero interest rates maintained by the US Federal Reserve.

There are many other reasons for gold's out performance this year. One, the change in the gold-dollar relationship. While investors have traditionally bought gold when the dollar weakened, this year was different. They bought the dollar and gold simultaneously as the euro weakened. Two, strong revival in jewellery demand after the recession induced dip last year. Three, growing investment demand for the metal from emerging and also developed nations as returns from other options dwindled. Further, gold fundamentals were supported by the lack of significant increase in mine outputs during the year and a fall in scrap gold sales. With global economies still in the grip of uncertainty, gold continues to present a case for investment. The demand for gold has been traditionally driven by jewellery consumption. But that seems to be changing with investment demand for gold now driven by a range of products such as Gold Exchange Traded Funds.

some of these deals happening quite recently, there may be potential for further value unlocking in gold stocks. But before you choose mining funds over plainer options like gold ETFs do note that they are high risk bets they are more volatile than gold and also tend to under perform physical gold during a downturn. While most of the arguments presented here may well hold good in the coming year too, possible increases in interest rates that will make bond yields attractive, are a risk. Resurfacing concerns over another wave of recessionary conditions should keep investment demand for gold firm, as investors look to hedge against financial market volatility and vulnerability.

US ECONOMY: DELIBERATE AUGMENTATION HIGHLIGHTS FEEBLENESS

The US economy grew slower than Wall Street analysts had expected in the third quarter, and the housing market continued to struggle, highlighting the challenges of sustaining a fragile recovery. Analysts, who had initially forecast that 2010 would see a modest upturn in housing, are now predicting that prices will decline in 2011 by as much as 10 per cent, as a record number of distressed properties floods the market. The ongoing weakness has prompted some Wall Street economists to call for major intervention by Washington to head off prolonged stagnation.

Sales of existing homes grew by 5.6 per cent in November to seasonally adjusted 4.68m properties, but that is 28 per cent below year-ago levels. Although house prices rose 0.7 per cent in October, the index compiled by the Federal Housing Finance Agency has fallen 3.4 per cent over the preceding 12 months. Rising interest rates are also acting as a headwind by making it more expensive to refinance an existing mortgage or get a new loan. Purchase applications fell 2.5 per cent in the most recent week, while refinancing activity was down 25per cent to its lowest level since April, according to the Mortgage Bankers Association. .


2011 OUTLOOK: The combination of undesirably low inflation in the US, deflation in Japan, the ongoing sovereign debt crisis in Europe and a BBB recovery in virtually all of the mature economies implies that G10 central banks will keep their foot on the monetary accelerator for much or all of 2011. With official interest rates near zero in major economies and quantitative easing in various disguises continuing at least in the G3, monetary policy looks set to remain super-expansionary and will support the ongoing reflation of the global economy, in our view. The US economy is expected to register gross domestic product growth of 2.7% in 2011, according to Reuter's data, with the US unemployment rate remaining high, at 9.8%.


On that basis, many analysts see the S&P 500 scoring double-digit gains and finishing 2011 at 1400 or higher. Analysts are also forecasting that the DJIA will continue to rally though it is unlikely that the Index will reach a record next year however possibility of gaining 13000 still on the cards. Indeed, the weak labour market has been a main concern of consumers and investors alike over the past year. The private sector has added more than 1.1m jobs in the past 11 months; however this has hardly been enough to replace the eight million-plus lost to the recession or curb the worrisome unemployment rate. However, going into 2011, as the economy is forecast to expand at a pace of 3.2 per cent, an uptick in hiring is expected with corporations expending their hoarded cash to ramp up production.