Laurus Labs Q3 Results: Profit Slumps 89%, Misses Estimates

Laurus Labs Ltd.'s third-quarter profit declined missing analysts' estimates.

The pharmaceutical firm's consolidated net profit slumped 89% year-on-year to Rs 23 crore in the quarter ended December, according to an exchange filing on Wednesday. That compares with the Rs 105-crore consensus estimate of analysts tracked by Bloomberg.

• Revenue declined 23% to Rs 1,195 crore. (Bloomberg estimate: Rs 1,386 crore).

• Operating profit down 55% at Rs 181 crore (Bloomberg estimate: Rs 276 crore).

• Operating margin stood at 15.18% versus 26.11% a year ago (Bloomberg estimate: 19.9%).

"Excluding the large CDMO PO, the underlying revenue growth was 6% year-on-year (in Q3)," Chief Financial Officer VV Ravi Kumar said in the filing. The Ebitda margin remained compressed due to higher spends on growth projects, he said. "We expect overall business momentum to pick, supported from healthy order book and execution on strategic manufacturing partnerships, along with ongoing realisation of cost initiatives driving improvement in operational results."

"Our 9M operating results was challenging, driven by steep fall in CDMO revenues, price erosion in ARV portfolio over last year and operational deleverage, from higher upfront cost of capex and R&D projects."

• Generic formulations business generated a revenue of Rs 367 crore, a jump of 47%. Overall growth was due to higher offtake in the anti-retroviral business and growth in developed markets portfolio. "Multiple U.S. product launch scheduled in next quarter and continued volume share gain on existing products in Europe/US to drive growth."

• Active pharmaceutical ingredients reported a revenue of Rs 574 crore, down 9% due to transitionary shipment impact and subdued pricing in other APIs. "ARV business retained volume led steady momentum."

• Custom synthesis business reported 67% decline in revenue at Rs 212 crore. Decline was driven from large supply contract execution last year, the filing stated.

• Laurus Bio segment's third-quarter sales were at Rs 42 crore, up 91% year-on-year. The growth was led by diversifying CDMO services into an expanding customer base. "Solid fermentation technology base supports expanding developmental pipeline and new strategic partnerships."

• R&D spends were at Rs 67 crore and 5.6% of revenues.

"While Q3 headline results were subdued, the underlying financial strength of our businesses and demand visibility have remained resilient. The positive momentum in FDF, Onco APIs and Bio division was more than offset by transient CDMO-Synthesis and Other APIs weakness. Momentum in our CDMO pipeline and RFP flows have continued with increased commercial opportunities for several late phase NCE projects," said Satyanarayana Chava, chief executive officers of the company.

"Our investment into innovative CGT momentum had continued, with NexCAR19TM commercially launched in India and further making rapid progress on commercial collaboration."

Shares of Laurus Labs were down 2.28% at Rs 390.05 apiece on the BSE, after the results were announced, as compared with a 0.98% gain in the benchmark Sensex at 3:30 p.m.