LAURUSLABS

Laurus Lab (LAURUS) delivered a second consecutive quarter with betterthan-expected performance, led by healthy traction in the Formulation (FDF)/API segment. Despite softer-than-expected performance in the CDMO business during 4QFY25, the quarterly sales run rate continued its uptrend. We slightly raise our FY26/FY27 estimates by 3%/1%, factoring in: a) the scale-up from new launches in the FDF segment, and b) an accelerated pace of product orders in late-phase clinical trials/commercial stage and improved operating leverage. We value LAURUS at 47x 12M forward earnings to arrive at a TP of INR750. After three years of deteriorated earnings, LAURUS ended FY25 on a strong note, with 92% YoY growth in PAT. The long manufacturing lead times for CDMO projects and higher capex intensity not only impacted earnings but also affected overall return ratios over the past two years. With improving asset utilization driven by project execution in the CDMO segment and new launches in the FDF segment, we expect 18%/25%/57% CAGR in sales/EBITDA/PAT over FY25-27. Reiterate BUY on the stock.