Sharekhan on #LaurusLabs


Concerns Overdone; Growth prospects intact⚡️

Target Price: 800

Basis sturdy growth prospects and capacity expansion plans, Laurus has targeted for a $1bn revenues by FY23

Long term driver in place

Q2FY22 earnings trajectory to be intact👇🏻

During Q1FY22 Laurus has commissioned its 1 bn tablets capacity in the FD (Finished Dosages) segment and the same would add to the Q2FY22 performance.

Also new client additions, growth from existing customers would drive the synthesis segment sales.

Commissioning of Laurus Bio’s fermenters (2 fermenters each with 45000 KL capacity) also would also aid the topline growth

Laurus is fortifying its position in the FD and synthesis segments, strengthening its presence in non- ARV space and growing in new area of biologics

The company is building new capacities that would support the robust demand and also propel growth in the coming years.

Emerging opportunities from patent expiry of drugs in areas of anti-diabetes and cardiology offer significant potential for Laurus.

Concerns overdone - Marketing Authorization Suspension

The recent clarification over the non- suspension of marketing authorizations of Laurus’ products points at concerns being overdone.

“Correction in stock price has been steeper than the concerns.. good entry point”

As of Q1FY22:

Laurus has filed 28 ANDAs in the US and has 66 DMF’s

It looks to increase the filling pace in FY22 and in Q1FY22 the company has filled for 5 ANDA’s.

Total number of projects under the CDMO division stood at 50

Commercial supplies ongoing for 4 products.

Laurus has embarked on an ambitious capacity expansion plan at an investment of Rs. 1,500-1,700 crore over the next two years

Laurus is also expanding capacities towards backward integration of intermediates, additional API capacity for existing products and new products

Overall, a sturdy demand outlook supported by capacity expansion would enable Laurus to expand its product basket and also enable higher volumes which in turn could drive market share gains going ahead.

At CMP the stock trades at 24.8x and 19x its FY22E and FY23E EPS respectively. Further the stock price has corrected by ~16% from its highs and this provides a good entry point for investors.

Key Risk: Delay in product approvals or any -ve outcome of facility inspection
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