Laurus Labs surges 6% to hit over 4-month high

Analysts remain optimistic on the company's outlook for FY23 & FY24 with new capacity addition for commercial usage for FDF and API segments, ARV business and robust growth expected in CS business.

Shares of Laurus Labs hit an over four-month high of Rs 587.65, surging 6 per cent on the BSE in Friday’s intra-day trade on heavy volumes. The stock of the pharmaceutical company was trading at the highest level since October 21, 2021. It had hit a record high of Rs 724 on August 12, 2021.

At 12:02 pm; Laurus Labs was up 4 per cent at Rs 577, as compared to a 0.20 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped 1.3 times with a combined 2.9 million equity shares having changed hands on the NSE and BSE.

Since February 10, 2022, the stock has rallied 12 per cent after the company said it received purchase orders from a leading global life sciences company and the supplies will commence from March 2022. The executions of these orders are subject to fulfillment of certain performance obligations.

Laurus operates in generic active pharmaceutical ingredients (APIs) & FDFs (formulations), custom synthesis and biotechnology. While anti-retroviral (ARV) APIs dominate the current mix, there is an optimal shift towards oncology and other APIs, custom synthesis and non-ARV FDFs.

In the October-December quarter (Q3FY22), the company's revenues fell 20 per cent year-on-year to Rs 1,029 crore due to an impact of continued stocking concern in ARV business. Profit after tax was down 43.7 per cent YoY at Rs 153.70 crore. The company said its Q3FY22 results were impacted by lower sales of ARV, APIs and formulations due to stocking at channel partners and it expects improvement in Q4.

However, Laurus Labs in Q3 results conference call said the company is witnessing increased demand for the ARV business.

“Increased demand for ARV business, witnessing commodity customers and formation sales from global multilateral agencies comes from January-March quarter (Q4) onwards. And we believe that the sluggishness is only transitory in nature and should be normal from – onwards,” it had said.

Analysts at Antique Stock Broking remain optimistic on the outlook for FY23 & FY24 with new capacity addition for commercial usage for FDF and API segments, ARV business resuming normal tender cycle, scale up in developed market formulations, robust growth expected in CS business on the back of new green field capacity creation available for commercial from FY24, new client additions and project advancements.

“We retain our Buy rating on the stock with a target price of Rs 635,” the brokerage said.