LUPIN CASE

STUDY
SUBMITTED BY:-

Name Enrollment Number

Pravin Kumar Shukla 19BSP1993
Shubham Dubey 19BSP
Sakshi Singh 19BSP2403
Rajani Shete 19BSP2120
Shreyansh Kumar 19BSP2679
Sangram Raut 19BSP
Piyush Singh 19BSP1859
Sarvagya Sharma 19BSP2482
Neha Nagar 19BSP1699
Shital Bodke 19BSP
Pranali Narkar 19BSP1921
ABOUT LUPIN

• Lupin was an innovation-led transnational pharmaceutical company headquartered in

Mumbai. It was founded in 1968 by Dr. Desh Bandhu Gupta.
• The company’s drugs and products were sold in over 100 countries across the globe.
Its major markets included the USA, India, Japan, Europe, South Africa, Philippines,
and Australia.
• The company had world class manufacturing facilities spread all over these countries
and these were approved by international regulatory authorities like US FDA, the
UK MHRA, Japan’s MHLW, TGA Australia, WHO, and the MCC South Africa.
PHARMACEUTICAL SECTOR OF INDIA

• Pharmaceutical sector is one of the leading sector in India.

• Indian pharmaceutical sector supplies 50%of global demand.
• The drugs and pharmaceuticals sector attracted cumulative FDI inflows worth US$ 15.98
billion
• The government of india had planned to set a venture fund capital of us$0.64 billion.
• In 2017, Indian pharma company received 304 abbreviated new drugs.
SYNOPSIS OF THE CASE

• The stock price of Lupin Ltd. hit a 52-week low Rs. 846.20 on November 7, 2017. This
happened when the company informed the NSE and BSE that it had received a warning
letter from the US FDA.
• After which there was a steep decline in the stock price and also the valuation of the firm
declined by Rs. 78.66 billion.
• This triggered an alarm among the brokerage houses and they cut their target prices for
this stock very heavily.
• Investors were also left at sea wondering wether they should sell the stock, or hold it, or
buy more.
QUESTIONS TO
BE CONSIDERED
 1. Analyze the risk and return of the Lupin stock and the
market using yearly returns. Applying CAPM model, check
whether the stock is underpriced or overpriced.
           

Date Lupin Stock Price(close) Nifty 50 (Close) Stock Returns Nifty 50 Returns
 
  Nov 7, 2008 138.25 2973 0.00% 0.00%

  Nov 6, 2009 264.01 4796.15 90.97% 61.32%

  Nov 8, 2010 447.9 6273.2 69.65% 30.80%
  Nov 8, 2011 480.65 5289.35 7.31% -15.68%
  Nov 7, 2012 588.65 5760.1 22.47% 8.90%
  Nov 7, 2013 876.45 6187.25 48.89% 7.42%
  Nov 7, 2014 1419.35 8337 61.94% 34.74%
  Nov 6, 2015 1857.85 7954.3 30.89% -4.59%
  Nov 7, 2016 1518.6 8497.05 -18.26% 6.82%

  Nov 7, 2017 859.9 10350.15 -43.38% 21.81%

           
      Average Yearly Returns 27.05% 15.15%

      Std Deviation 39.70% 21.31%

      Correlation 0.59  
      Beta 1.10  

      CAPM 13.93%  
 2. Calculate the risk and return of the Lupin stock and the market
using the monthly returns. Calculate the correlation between the
stock and market return, beta of stock, and the return the investors
want from Lupin stock. Interpret the results.
Date Lupin Stock Price(close) Nifty 50 (Close) Stock Returns Nifty 50 Returns
 
  Nov 7, 2016 1518.6 8497.05 0.00% 0.00%
  Dec 7, 2016 1504.75 8102.05 -0.91% -4.65%
  Jan 6, 2017 1512.05 8243.8 0.49% 1.75%
  Feb 7, 2017 1466.15 8768.3 -3.04% 6.36%
  Mar 7, 2017 1457.3 8946.9 -0.60% 2.04%
  Apr 7, 2017 1410.05 9198.3 -3.24% 2.81%
  May 8, 2017 1279.8 9314.05 -9.24% 1.26%
  Jun 7, 2017 1154.45 9663.9 -9.79% 3.76%
  Jul 7, 2017 1117.3 9665.8 -3.22% 0.02%
  Aug 7, 2017 985.05 10057.4 -11.84% 4.05%
  Sep 7, 2017 978.5 9929.9 -0.66% -1.27%
  Oct 6, 2017 1038.9 9979.7 6.17% 0.50%
  Nov 7,2017 859.9 10350.15 -17.23% 3.71%
           
      Average Yearly Returns -4.09% 1.56%
      Std Deviation 6.02% 2.68%
      Correlation -0.47  
      Beta -1.01  
      CAPM -9.77%  
 3. Analyze the risk and return of the lupin stock and
the market using daily returns. Compare and
interpret the results.
Date Lupin Stock price (close) Nifty 50 (Close) Stock Returns Nifty 50 Returns

1-Nov-17 1028.15 10440.5 0.00% 0.00%

2-Nov-17 1061.3 10423.8 3.22% -0.16%
3-Nov-17 1047.7 10452.5 -1.28% 0.28%
6-Nov-17 1034.55 10451.8 -1.26% -0.01%
7-Nov-17 859.9 10350.15 -16.88% -0.97%
8-Nov-17 841.25 10303.15 -2.17% -0.45%
9-Nov-17 830.45 10308.95 -1.28% 0.06%
10-Nov-17 833.3 10321.75 0.34% 0.12%
13-Nov-17 827.15 10224.95 -0.74% -0.94%
14-Nov-17 835 10186.6 0.95% -0.38%
15-Nov-17 823.65 10118.05 -1.36% -0.67%
16-Nov-17 829 10214.75 0.65% 0.96%
17-Nov-17 829.55 10283.6 0.07% 0.67%
20-Nov-17 826.15 10298.75 -0.41% 0.15%
21-Nov-17 837.45 10326.9 1.37% 0.27%
22-Nov-17 827.4 10342.3 -1.20% 0.15%
23-Nov-17 827.35 10348.75 -0.01% 0.06%
24-Nov-17 829.35 10389.7 0.24% 0.40%
27-Nov-17 831.45 10399.55 0.25% 0.09%
28-Nov-17 832.3 10370.25 0.10% -0.28%
29-Nov-17 834.65 10361.3 0.28% -0.09%
30-Nov-17 817.7 10226.55 -2.03% -1.30%
         
    Average Yearly Returns -0.96% -0.09%
    Std Deviation 3.67% 0.52%
    Correlation 0.46  
    Beta 3.21  
    CAPM 1.83%  
THANK YOU