Apr'25 View on Laurus Labs Ltd

Laurus Labs is a research-driven pharmaceutical and biotechnology company having a global leadership position in select Active Pharmaceutical Ingredients (APIs) including anti-retroviral, oncology drugs (incl High Potent APIs), Cardiovascular, and Gastro therapeutics. They also offer integrated CMO and CDMO services to Global Innovators from Clinical phase drug development to commercial manufacturing. Laurus employs 6500+ people, including around 1050+ scientists at more than 11 facilities approved by global agencies USFDA, WHO-Geneva, Japan-PDMA, UK-MHRA, EMA, TGA etc. Analysis • Laurus reported a 24% sequential jump in Synthesis sales in Q3FY25. • We expect earnings to grow by 59.2% in FY26E & grow by 28.7% in FY27E. • Stock is currently trading at valuation of 50.6x P/E FY27E EPS. • We believe that the long-anticipated earnings recovery is fully factored in. • We tweak our FY25-27E EPS by 1-3%,; retain SELL with an FV of Rs420. Q3FY25 Earnings Update: Positives: • Laurus' Q3FY25 sales at Rs1223.7 cr (+18% yoy) were in line with our estimates. • EBITDA margin at 20.2% improved 560 bps qoq (70 bps above KIE est.). • We bake in a healthy growth trajectory in FY26-27E for Synthesis. • We still factor in robust growth in other CDMO opportunities (ex-Aspen). Negatives: • We remain a tad conservative & bake in 19.1% EBITDA margin in FY25. • We expect the weakness in ARV to largely sustain.