Target: ₹396
CMP: ₹305.75
Laurus Labs Limited, an Indian pharmaceutical company, was incorporated in 2005 by Dr Satyanarayana Chava as an Anti-Retroviral (ARV) Active Pharmaceutical Ingredient (API) company. Laurus diversified its operations by entering into formulations and Contract Development and Manufacturing Organisation (CDMO) services to become an integrated pharmaceutical company.
Currently, the company’s business operations are diversified into Generics API, Formulations, CDMO Services, and Biotechnology. The company markets its products globally in over 60 countries, with exports contributing about 72 per cent of the overall revenue.
The company’s ARV segment faced pricing pressure during 9M FY23, impacting the overall margins due to high product concentration. However, Laurus is gearing up its capacity expansion in non-ARV and CDMO segments, which will help to reduce product concentration risk and tap patent expiry opportunities. In addition to this, the Company is expanding its reach in developed markets through niche product pipelines.
Thus, looking beyond near-term headwinds, we initiate coverage on Laurus Labs Ltd with a BUY rating and a target price of ₹396.