Mumbai-based Lupin is the latest pharma major to have run into the US FDA wall. While its operating profit rose 73% to Rs.1,370 crore and revenues grew 34% to Rs.4,090 crore in Q4FY16, observations from the US drug regulator over its two plants have proved to be a dampener. In the past three months, the stock has corrected 22% from Rs.1,800 levels to around Rs.1,400 levels. Though the FDA recently gave clean chit to the two units, the company's plant in Goa continues to be under the regulator’s watch.

Using the slide in the stock price, promoter, Desh Bandhu Gupta, has mopped up additional shares. Lupin Holdings, one of the promoter entities, on June 3, purchased 39,000 shares from the open market for Rs.5.6 crore. Post the transaction, it now holds 8.9% stake, taking the overall promoter holding closer to 47%.

Interestingly, while mutual funds have been cutting their exposure to the company in recent quarters, foreign institutional investors (FIIs) have been accumulating. Consider this: Starting Q3FY15, while mutual funds have reduced their stake from over 5% to 3.86% (as of March 2016), FII holding has gone up to over 35% from 31%. It seems FIIs still believe that Lupin’s strong run will continue in the near future.

Analysts expect Glumetza and Fortamet (both used in diabetes treatment) to drive revenue in FY17. Besides, the company is looking at 30 new launches in the current fiscal, with 15 products expected from the Gavis pipeline. In March, Lupin had completed the $889 million acquisition of the US-based generics firm Gavis. While the near-term performance is likely to be steered by the two diabetes drugs, the Street believes that in the long term, growth will be driven by Gavis, pickup in the pace of drug approvals and an upside from differentiated filings.