Laurus rallies 19% in 4 days; zooms 111% YTD; what's driving CDMO stock?

Laurus Labs’ share price continued its upward movement, hitting a new high of ₹2,338.90, surging 4 per cent on the National Stock Exchange (NSE) in Friday’s intraday deals on the back of strong September 2026 quarter (Q2FY27) earnings. In comparison, the Nifty 50 quoted flat or up 0.22 per cent at 22,987.45 at 09:38 AM.

The stock price of the pharmaceutical company quoted higher for the fourth straight day, soaring 19 per cent during the period. Thus far in the calendar year 2026, the market price of Laurus zoomed 111 per cent, compared to a 12.2 per cent decline in the Nifty 50. It bounced back 154 per cent from its 52-week low of ₹917.95 touched on February 2, 2026.

Laurus Labs holds a leadership position in developing and manufacturing select Active Pharmaceutical Ingredients (APIs) and Finished Dosage Forms (FDF) across anti-retroviral, oncology, cardiovascular, and gastro therapeutics. The company offers end-to-end Contract Development and Manufacturing Organization (CDMO) services, supporting innovators from early-stage development to commercial production. 

For Q2FY27, Laurus’ revenue grew 33 per cent year-on-year (YoY) at ₹2,206 crore. The CDMO business grew 86 per cent YoY, reaching ₹875 crore. The growth in Generic Formulations was at 31 per cent to ₹677 crore and Generic API grew 1 per cent YoY to ₹625 crore.

Earnings before interest, tax, depreciation and amortization (EBITDA) stood at ₹750 crore with a margin of 34 per cent, marking a significant improvement of 962 basis points YoY mainly due to a 314 bps YoY improvement in GPM to 63 per cent. Profit after tax more than doubled to ₹441 crore from ₹195 crore in Q2FY26, driven by a favourable product mix and improving operational leverage.

Driven by sustained momentum across both CDMO and Affordable Medicine division, the company achieved revenue growth. The EBITDA margins were supported by improvement in capacity efficiency from growing commercial supplies. Gross margins improved due to favorable segment mix.

According to ICICI Securities, the CDMO growth for the quarter was phenomenal due to higher contribution from late-stage clinical projects and commercial API supplies and strong recurring business from existing relationships. Out of ₹5180+ crore of capex that the company incurred during FY22-27, almost 84 per cent was earmarked towards API / CDMO. 

The company is now getting the benefit of the same as the CDMO quarterly run rate rose from ₹220-250 crore to ₹450-500 crore and now to ~₹ 800+ crore in two years. As per the management, the traction is broad-based unlike earlier bump which was driven by one large purchase order. Around 55 per cent of the CDMO revenue was derived from commercial suppliers and the remaining from late-stage clinical projects, thus assuring the sustainability of the run rate going ahead (management expects the same). 

The incremental capex guidance of ₹3,000 crore for FY27/28 is again tilted towards CDMO. Besides CDMO, Laurus is also investing in new edge technologies such as Cell and Gene therapies along with proposed acquisitions for Oligonucleotides and peptide/resin capabilities. The brokerage firm in a note said that it continues to monitor the progress on these driving factors which could be the growth drivers beyond FY30.

Meanwhile, analysts at Nuvama Institutional Equities forecast CDMO revenue to grow 3.4 times to ₹7,160 crore by FY29E with CDMO contributing more than 50 per cent by FY29E. This shall enhance the earnings before interest, tax, depreciation and amortization (EBITDA) margin profile to near 35 per cent. Its tightly guarded peptide facility shall open soon, yielding ₹1,000 crore - ₹1,600 crore in revenue opportunities at a 35 per cent margin, the brokerage firm said while initiating coverage on the stock with a ‘Buy’ rating and target price of ₹2,520 per share.

Foreign portfolio investors (FPIs) have accumulated shares of Laurus Labs for the second straight quarter. FPIs, which become the largest shareholder, increased their stake in the company to 30.8 per cent in September 2026 quarter (Q2FY27) from 28 per cent at the end of June 2026 quarter. FPIs held 25.8 per cent in Laurus Labs at the end of March 2026 quarter, the shareholding pattern data shows.

Meanwhile, domestic institutional investors (DIIs) holding in Laurus Labs declined to 11.9 per cent in Q2FY27 from 13.7 per cent in Q1FY27 and 14 per cent in Q4FY26. The public shareholding (excluding FPIs and DIIs) in Laurus Labs declined for the fourth straight quarter. They reduced their holding in the company to 29.9 per cent in Q2FY27 from 30.8 per cent in Q1FY27. They held a 34.5 per cent holding at the end of September 2025 quarter, data shows. Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.