Add Laurus Labs Ltd for the Target Rs. 1,255 by Choice Institutional Equities
CDMO-led Growth with Generics as a Steady Base
LAURUS is strategically transitioning towards a CDMO-led model, targeting ~50% revenue contribution by FY29E. Growth is expected across segments: Generics supported by ARV recovery, higher volumes, improved utilisation and oncology API scale-up, while CDMO growth will be driven by increased order inflows from large players, commercialisation and a focus on high-complexity offerings. The evolving product mix, with higher CDMO contribution, is anticipated to support margin expansion. However, profitability may see slower growth due to elevated capex. We revise FY27/28E estimate downwards by 7.0%/7.8%. We value the company at 50x FY28E EPS, arriving at a revised TP of INR 1,255 (earlier INR 1,140).
Margin Expansion Trajectory Continues
* Revenue grew 5.3% YoY / 1.9% QoQ to INR 18,116 Mn (vs. CIE estimate: INR 19,892 Mn).
* EBITDA grew 21.8% YoY / 6.6% QoQ to INR 5,121 Mn (vs. CIE estimate: INR 5,032 Mn); margin expanded 382 bps YoY / 126 bps QoQ to 28.3% (vs. CIE estimate: 25.3%).
* PAT increased 21.2% YoY / 12.0% QoQ to INR 2,821 Mn (vs. CIE estimate: INR 2,673 Mn).
Strong CDMO Momentum to Lift Mix to 50% with ~25% CAGR by FY29E
CDMO (small molecules & biologics) remains the key growth driver, sustaining strong momentum. We expect this trajectory to continue as the company sharpens focus on high-complexity, low-volume chemistries and scales up commercial supply agreements with large pharma players, leveraging its manufacturing capabilities. CDMO contribution is projected to rise to ~50% of revenue by FY29E (vs. ~41% currently), which should also support margin expansion. We forecast a revenue CAGR of ~30% for small molecules and ~20% for biologics over FY26–29E.
Generics Growth Accelerates on ARV and Oncology API Strength
Generics (API + formulations) delivered healthy growth, supported by higher utilisation of ARV assets and improved volumes. We expect the growth trajectory to sustain, led by oncology APIs and increased integration with the CDMO segment. However, API revenue contribution may moderate as a larger share is directed towards captive consumption. Additionally, a robust pipeline of new launches should further support growth.
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SEBI Registration no.: INZ 000160131
