Laurus Labs up 8% in two days on purchase orders from global pharma company

Shares of Laurus Labs rallied 5 per cent intra-day to Rs 568 in an otherwise weak market on Friday, gaining 8 per cent in the past two trading days after the company on Thursday said it has received purchase orders from a leading global life sciences company and the supplies will commence from March 2022.

At 12:13 pm; the stock was trading 4 per cent higher at Rs 558.65, as compared to a 1.4 per cent decline in the S&P BSE Sensex.

“The company received purchase orders from a leading global life sciences company and the supplies will commence from Mar 2022. The executions of these orders are subject to fulfillment of certain performance obligations,” Laurus Labs said in an exchange filing.

Based on confidentiality agreement, name of the customer, product and volume details cannot be disclosed. This is not a related party transaction and none of the promoters/promoter group/group companies have any interest, the company said.

The stock price of Laurus Labs has recovered 31 per cent from its January 2022 low of Rs 433, after the company said it is witnessing increase demand for anti-retroviral (ARV) business. However, in the past six months, the stock has underperformed the market by falling 20 per cent, as compared to a 6.5 per cent rise in the Sensex. It had hit a record high of Rs 724 on August 12, 2021.

“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,” Laurus Labs had said in a conference call.

In 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, active pharmaceutical ingredients (APIs) and formulations due to stocking at channel partners and it expects improvement Q4.

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

Analyst at ICICI Securities maintain positive stance with ‘BUY’ rating on Laurus Labs on the back of optical product mix shift towards more margin accretive businesses via visibility capex. Laurus is evolving as a strong vertically integrated player with strong order book visibility and incremental traction from custom synthesis, the brokerage had said in a result update.