Lupin's (LPC) core operational performance for Q1FY13 was in line with Motilal Oswal's expectations. Key highlights:

- Topline grew 44% YoY to Rs22.2b. Excluding one-offs, core topline is likely to have grown 33% YoY to Rs20.5b (v/s their estimate of Rs18.9b). Core EBITDA is likely to have grown 21% YoY to Rs3.27b (v/s their estimate of Rs3.45b). Motilal oswal estimate adjusted PAT at Rs2.1b.

- Core topline was boosted by favorable currency movement. US revenue grew 63% YoY to Rs8b. Japan revenue grew ~100% YoY to Rs3.3b, boosted by Irom acquisition. Domestic formulations sales grew 25% YoY while RoW formulations sales grew 54% YoY.

- Reported EBITDA grew 57% YoY to Rs4.23b. Excluding one-offs, core EBITDA is likely to have grown 21% YoY to Rs3.27b (v/s their estimate of Rs3.45b). Core EBITDA margin was 16% v/s their estimate of 18.2% due to higher than expected staff cost and other expenditure.

- Reported PAT grew 33% YoY to Rs2.8b (v/s their estimate of Rs3.1b). Excluding one-offs, adjusted PAT is likely to have been Rs2.1b (in line with their estimate but flat YoY). PAT was impacted by significantly higher tax rate of 30% v/s their estimate of 23%.

Key growth drivers will be: (1) increased traction in India formulations and emerging markets, (2) strong launch pipeline for the US, and (3) contribution from oral contraceptives in the US. Based on Q1FY13 performance, Motilal Oswal has cut their FY13E core EPS by 6% and FY14E core EPS by 1.2% to take into account the possibility of a slower rampup in over the counter sales and likely impact on simvastatin sales from generic Lipitor for the US business. Motilal Oswal expects EPS of Rs23.8 for FY13 (up 23%) and Rs31 for FY14 (up 30%), translating into 26% EPS CAGR over FY12-14. Significant internationalization of operations without dilution of return ratios has been LPC's key achievement over the last five years. Motilal Oswal expects this to sustain. The stock trades at 24.5x FY13E and 18.9x FY14 EPS. Buy.