Laurus Labs Q4 Results Review - Product Mix, Reduced Operating Leverage Hurt Profitability: Motilal Oswal

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Laurus Labs Ltd. delivered better-than-expected revenue in Q4 FY24. However, Ebitda/profit after tax missed our estimates due to lower sales in the contract development manufacturing organisation segment and weak pricing in the other active pharma ingredient segment. The $100 million investment in CDMO is ongoing, with:supplies from animal health facilities to commence from FY25, and the facility qualification for intermediate manufacturing in the crop protection segment to be completed by end- FY25. .We cut our earnings estimates by 26%/9% to factor in:the gradual pickup in CDMO business,the delay in ANDA approvals, andincreased competition in the API segment. We value Laurus Labs at 31 times 12 months forward earnings to arrive at our target price of Rs 480.Laurus Labs invested Rs 26 billion over FY22-24 in the areas of CDMO (Rs 9 billion), APICDMO combined (Rs 10.4 billion), and drug product/FDF (Rs 6.5 billion). Even assuming a current asset turn of 0.9 times, the sales potential of these investments is Rs 23.4 billion, conservatively. While there has been a considerable decline in earnings over FY22-24, we expect the commercial benefits from investments to start contributing meaningfully over the next two-three years, thereby improving the return ratios as well. Reiterate Buy..Click on the attachment to read the full report:.Laurus Labs Q4 Results: Profit Drops 28%, Misses Estimates.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Laurus Labs Q4 Results Review - Product Mix, Reduced Operating Leverage Hurt Profitability: Motilal Oswal

Benefits from investments made over FY22-24 to gain momentum

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Laurus Labs Q4 Results Review - Product Mix, Reduced Operating Leverage Hurt Profitability: Motilal Oswal

Benefits from investments made over FY22-24 to gain momentum

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