Laurus Labs Ltd. reported a sharp improvement in its September-quarter performance, with net profit rising 126.7% year on year to Rs 442 crore and revenue increasing 33.5% to Rs 2,206 crore. EBITDA surged 86.3% to Rs 749 crore, while the EBITDA margin expanded to 34% from 24.3% a year earlier.
Brokerages acknowledged the strong operating performance and improving prospects for the company's contract development and manufacturing organisation (CDMO) business. Jefferies raised its target price by nearly 24% to Rs 2,100, while Goldman Sachs increased its target to Rs 1,600. Both retained their existing ratings.
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Kotak, however, maintained its Sell rating with a fair value of Rs 1,400. While it expects strong EBITDA growth and further margin expansion over the next three years, it flagged valuations as a concern. The brokerage debate centres on how much of Laurus Labs' expected growth is already reflected in its share price.
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Laurus Labs Q2 Highlights (YoY)
- Net profit up 126.7% to Rs 442 crore versus Rs 195 crore.
- Revenue up 33.5% to Rs 2,206 crore versus Rs 1,653 crore.
- EBITDA up 86.3% to Rs 749 crore versus Rs 402 crore.
- EBITDA margin at 34% versus 24.3%.
- Other income at Rs 13 crore versus Rs 27 crore.
- Tax expense at Rs 155 crore versus Rs 76 crore.
Here's what brokerages are saying after Laurus Labs announced Q2 results:
Kotak
- Maintained 'Sell'; Fair Value At Rs 1,400
- Expects around 34% EBITDA CAGR over FY26–29.
- Sees margins reaching around 36% by FY29.
- Laurus Labs plans more than Rs 30 billion in capex over FY27–28, largely targeting high-growth projects.
- Peptides, oligonucleotides and advanced therapies could expand CDMO opportunities.
- Valuations remain a concern.
Jefferies
- Maintained 'Hold'; Target Price Raised To Rs 2,100 From Rs 1,700
- Q2 revenue rose 33% year on year, while EBITDA increased 86%, taking the margin to 34%.
- Peptide manufacturing capacity has reached 16,000 litres.
- Commercial revenues are expected from the second half of FY28 or FY29.
- Raised FY27–28 EPS estimates by 6% and 4%, respectively.
Goldman Sachs
- Maintained 'Sell'; Target Price Raised To Rs 1,600 From Rs 1,425
- Q2 revenue grew 33% year on year, while EBITDA surged 86%, with the margin at 34%.
- CDMO revenue increased around 86% year on year, supported by late-stage projects and commercial API supplies.
- Raised FY27–29 EPS estimates by 17–22%.
- Flagged expensive valuations at around 75 times FY28 price-to-earnings.
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