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Key Rationale:

Laurus’s intention to achieve US$ 1Bn revenue in FY23 which is 50% growth, is expected to push the company in high growth period.

Revenue mix from Custom Synthesis business is expected to grow speedily due to healthy client addition, faster commercialization of projects with existing clients and management’s focus on higher margin segments.

The increased focus on Non ARV segments will pave the way for better revenue mix and improved margins.

Gross margin and Operating margin are expected to improve due to softening of raw materials and solvents prices.

As the company is aiming for higher growth, we upgrade our rating from ADD to OUTPERFORM and assign a 24-month price target of Rs.715 (c.22.4% upside) implying a 25x FPE multiple to FY24E EPS of Rs.28.6

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