Laurus Labs: CDMO Growth Outpaces APIs, but a P/E of 99.9

Laurus Labs (NSE : LAURUSLABS) manufactures APIs and finished pharmaceutical products and provides contract development and manufacturing services. Its API portfolio covers antiretrovirals, oncology, cardiovascular and CNS therapies. What happened: In FY26, Laurus generated API revenue of Rs 2,746 crore, up 13% from FY25. Its small molecule CDMO business recorded revenue of Rs 1,896 crore, up 38% year on year. The CDMO pipeline crossed 125 active projects, including over 102 in human health and around 23 in animal health and crop science. Cumulative drug master file filings reached 92 by March 2026. Capex for FY26 was Rs 1,070 crore, taking the cumulative total since FY22 to over Rs 4,350 crore. Why it matters: CDMO growing at 38% versus API at 13% signals a deliberate shift toward higher-value contract work. The two segments have different customer requirements and demand drivers, which affects revenue read-through. Laurus secured 531.77 acres in Andhra Pradesh in July 2025 for future expansion. The stock has returned 130% over one year at a P/E of 99.9. Motilal Oswal’s Buy target of Rs 1,980 sits below the current price of Rs 2,018. What I am watching: Cumulative capex of Rs 4,350 crore since FY22 is a large bet on CDMO execution. New facilities must pass regulatory qualification and attract commercial orders before they contribute to earnings. The 125-project pipeline matters only if a meaningful share progresses from early development through to commercial volumes over the next two to three years. My stance: The CDMO direction is right and the pipeline is real. But Rs 4,350 crore in capex demands clean execution, and a P/E of 99.9 leaves no room for misses. I do not hold a position in Laurus Labs at the time of writing. This is not investment advice.