Laurus Labs Eyes 24% EBITDA Margin In FY26 After Strong Q4 Results

Laurus Labs Ltd. projected healthy Ebitda margins in FY26 on the back of strong demand in the CDMO segment and asset leverage.

The company is expected to achieve Ebitda margins of 24–24.5% in the current fiscal, according to Chief Executive Officer Satyanarayana Chava.

Speaking to NDTV Profit on Friday, Chava highlighted that while it's difficult to predict exact figures, the company anticipates better revenue growth in FY26 compared to FY25.

When asked about the potential for revenue growth in FY26 and the possibility of maintaining the margins at the Q4 FY25 levels in FY26, Chava replied in the affirmative.

The pharmaceutical company reported a margin of 27.7% in Q4 FY25, marking a significant year-on-year rise against 18% in the same quarter of the preceding fiscal, on the back of higher revenue from CDMO and asset leverage.

"In the previous quarters, we guided the investors that the H2 FY25 is going to be good, and we delivered those numbers. When we delivered 20% in Q3, then people were thinking, unless we do more than 20% Ebitda for Q4, we'll never be able to get an average output. Interestingly, we did that because of a higher revenue share coming from CDMO," he said.

In its earnings report released on Thursday, the Hyderabad-based company reported 19% YoY growth in revenue to Rs 1,720 crore in Q4 FY25 against Rs 1,440 crore in Q4 FY24. The company;s net profit surged three times to Rs 234 crore in the March 2025 quarter, compared to Rs 76 crore in the year-ago period. Its earnings before interest, taxes, depreciation and amortisation increased to Rs 477 crore, marking an 84% YoY rise from Rs 259 crore in Q4 FY24.

On the contributions of CDMO business to the future growth of the company, Chava said that over the next five years, Laurus Labs expects the CDMO's contribution to revenue to be roughly equal, matching the contribution of generics. This bold projection comes against the backdrop of the CDMO’s share in the business increasing from 19% in FY19 to 25% in FY25.

Explaining the projections, Chava highlighted that the company has heavily invested in capex in the last three years. "I think the majority of CDMO growth will come from human health, followed by animal health. We expect FY 27-28 from here to be a commercial year where all the molecules that we're validating will go on. We also started nurturing another relationship in animal health that should start taking in some revenue," he said.

He reiterated that the human health segment remains the largest part of the company's CDMO business and will continue to be the dominant segment. He also maintained that geopolitical factors, such as shifting global supply chains, particularly due to rising tariffs on China, could benefit Laurus Labs.

"We have expertise in new technology platforms like biocatalysis, flow chemistry, and continuous manufacturing, which help us secure interesting projects," he said. "With our scale, we're confident in handling late-stage projects needing these technologies. If geopolitical factors come into play, it will definitely benefit us."