Lupin's promoter, DB Gupta, plans to privately place close to 10 per cent of his 75 per cent stake in the company. Gupta's holding would, however, increase to around 80 per cent if the promoter group opts for conversion of warrants, slated for June 1998.

The Lupin scrip, which had been hovering around the Rs 128 mark on April 23, fell to Rs 116 the next day on the BSE. The scrip moved further downwards to touch Rs 108 on April 30.

On May 12 and 13, the stock closed the day at Rs 111.80 and Rs 105 respectively, but commenced its upward movement on May 19 to end at Rs 121.90. Significantly, beginning May 20, the stock held fort at the Rs 129.90 level till May 22, but scaled the Rs 142 mark on May 25, up Rs 7 over the day'sopening price. On May 26, the scrip closed the day at Rs 157. Analysts say that the bullishness on the scrip could partly be attributed to the immense potential the company's cephalosporins range offers.

Cephalosporins accounted for almost 40 per cent of Lupin's export turnover of Rs 200 crore.

The company is set to "gain first wave entry" into the highly profitable global generic markets for injectible cefotaxime just as the drug goes off patent in August 1998. Cefotaxime is a third generation cephalosporin, one of the largest product groups in the antibiotics segment.

"Lupin's strategy to cash in on this generic wave, while lowering its dependence on its anti-TB portfolio, will be substantially strengthened by its marketing alliance with Merck Generics, the generics outfit of German multinational, E Merck. Besides, Lupin will have an edge on the pricing front," an analyst said.

The generics market is often characterised by cut-throat competition on the pricing front. International prices ofcefotaxime range between $8.5-9 per one gram vial against a corresponding domestic price of around $2, giving Indian companies enough leg-room on the pricing front. Lupin's official statement said, "For the past few years, we have been focusing on development of advanced cephalosporins technologies so as to be able to access the high value markets in developed countries such as western European countries and the US. Many of these efforts will bear fruit from 1998 onwards. For example, in August 1998, marketing of our cephalosporin formulations will commence via our alliance with Merck Generics." So, in the light of the company's intrinsic strengths, the Lupin scrip is highly undervalued, a fact which is well recognised by the international investors, the statement added. Another driving factor could possibly be Lupin's plans to enter the anti-diabetes, opthalmology, dermatology and vaccine segments even as it continues to rule the roost in the anti-TB market.