Laurus rallies 6%, hits new high on strong Q1; brokerages see more upside

Business Standard

6 days ago

Laurus Labs share price today
Shares of Laurus Labs hit a new high of ₹889.3, surging 6 per cent on the BSE in Monday's intra-day trade in an otherwise subdued market after the company reported strong earnings for the June 2025 quarter (Q1FY26). The BSE Sensex was up 0.06 per cent at 81,512 at 10:20 AM.
In the past one month, the stock of pharmaceutical company has outperformed the market by soaring 27 per cent, as compared to 2.7 per cent decline in the BSE Sensex. It has zoomed 128 per cent from its 52-week low of ₹390.30 on August 8, 2024.
Laurus Labs - Q1FY26 performance, outlook
Laurus delivered a solid performance in Q1, in line with market expectations. The management said they are pleased to see sustained growth momentum fueled by increasing uptake in the contract development and manufacturing organisation (CDMO) deliveries and healthy business fundamentals.
The company has achieved revenues of ₹1,570 crore, representing 31 per cent year-on-year (YoY) growth and earnings before interest, taxes, depreciation, and amortization (EBITDA) of ₹389 crore, representing 127 per cent growth. The EBITDA margins improved substantially to 24.8 per cent, from 14.3 per cent in Q1FY25, supported by continuing operating leverage. Gross margins stood strong at 59.4 per cent due to favorable CDMO mix and ongoing process improvement initiatives. Profit after tax stood ₹161.1 crore, driven by a favorable product mix and strong operational performance.
Laurus has made a healthy progress to start the year with increasing contributions from the CDMO business and continued advancement of pipeline projects, supported by Generic Formulation (FDF). The management said the company is moving ahead with strong focus on commercial execution realizing the full potential from promising pipeline opportunities, business development and rapidly enhancing scale and technology capabilities. ALSO READ |
Brokerages firm see more upside in stock price of Laurus
The CDMO growth was driven by several mid-to-late stage NCE deliveries and steady increase in sales from new manufacturing assets. Out of ₹3,200 core of capex that the company has incurred during FY22-25, almost ~75 per cent was earmarked towards active pharmaceutical ingredient (API) / CDMO. The company is now getting the benefit of the same as the CDMO quarterly run rate has gone up from ₹220-250 crore to ₹450-500 crore in two years. The CDMO contribution has also gone up from ~16 per cent to 33 per cent which has led to a significant margin expansion.
ICICI Securities said they continue to monitor progress on these driving factors which in a way are expected to change the business mix in favour of these segments in lieu of anti-retroviral (ARV).
Analysts at Choice Equity Broking believe Laurus is evolving from a traditional Generics player to a CDMO (Synthesis)–led model, with the segment targeted to reach ~50 per cent of revenues in the long term. Given the higher-margin profile of CDMO and operating leverage as new manufacturing assets ramp and current underutilization narrows, the brokerage firm expects sustained margin expansion. Analysts maintain 'buy' rating on the stock with revised target price of ₹1,025 against previous target price of ₹750.
Motilal Oswal Financial Services raise earnings estimates by 16 per cent/7 per cent for FY26/FY27, factoring in strong tailwinds in CDMO segment led by 110+ active pipeline projects/ramp-up from new manufacturing facilities, additional contracts in generic FDF segment, and margin expansion from scale. Considering a 63 per cent earnings compounded annual growth rate (CAGR) over FY25-27, the brokerage firm value Laurus at 56x 12M forward earnings to arrive at a target price of ₹970. Reiterate BUY.