Laurus Labs - Transforming Into A High Value Non-ARV API, FDF, CDMO Synthesis And Bio Business: KRChoksey

KRChoksey Research Report

Laurus Labs Ltd. is in the transformation phase by which it intends to reduce the share of anti-retroviral (finished dosage form and active pharma ingredient) businesses significantly and increase the share of other FDFs and APIs and contract development and manufacturing organisation synthesis and biologics businesses.

In the meantime, it has incurred over Rs 26.0 billion (average 16% of revenue) of capital investments over the last three years to augment capacity across generic APIs (non ARVs), FDF (non ARV), CDMO synthesis, and bio businesses.

The company expects other FDF sales to continue to rise at a strong pace on the back of new Dossiers and abbreviated new drug application approvals in the U.S., Europe and rest of world, and rising contract manufacturing deals.

Similarly, it expects the bio business’ growth to be driven by traction in CDMO synthesis business and expansion in customer base for the same. However, CDMO synthesis business, which is the major driver of higher operating profitability, is likely to be stable, as the company is currently working on research and development projects with partners whose commercial level sales may not be likely before the next 12-18 months; hence, we do not expect robust operating profitability expansion over FY23-FY26E.

We expect Laurus Labs to grow its revenue at a compound annual growth rate of 11.6% and net income to grow at a flat CAGR, respectively, over FY23-FY26E.

We initiate coverage on Laurus Labs with an 'Accumulate' rating and target price of Rs 403 per share, with an 6% upside from current levels after assigning a price/earning multiple of 26.0 times on FY26E earnings per share.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime 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 BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.