Shares of Laurus Labs Ltd hit a lower circuit during the trading session on Thursday after the company announced a miserable performance in the December 2023 quarter. The pharmaceutical player for leading the laggards after another disappointing performance and mixed reviews by the brokerage firms. The drugmaker reported a net profit of 23.84 crore, falling 88.5 per cent on a year-on-year (YoY) basis in the December quarter, with a 67 per cent on-year fall in CDMO-synthesis business. The company had reported a bottomline of 203.06 crore in the year ago period. Company's revenue dropped 22.6 per cent YoY to Rs 1,195 crore, with an Ebitda for the December 2023 quarter fell 55 per cent YoY to Rs 181 crore. Ebitda margin came in at 15.3 per cent for Q3FY24. Its margin over the last three quarters has been below the 20 per cent mark. Laurus reported another quarter of weak performance on multiple counts, said Kotak Institutional Equities, who called it a 'forgettable' quarter. "While we build in an improvement in non-CDMO sales starting 4QFY24, hopes of a significant margin revival primarily hinge on a meaningful ramp-up of the CDMO segment," it said, maintaining a 'sell' tag on the stock pegging its fair value at Rs 285. The crop science contracts in 2HFY25, the lack of visibility on any other commercial CDMO contracts is a worry. Given the steep ask-rate from the current Rs 900 crore annual run-rate, there still remain some downside risks to our lowered assumption of Rs 1,520 crore synthesis sales in FY2025E. The weakness in the core business over the past two years remains unsettling, it added. Following the announcement, shares of Laurus Labs tumbled 10 per cent, hitting the first lower circuit limit on Thursday, to Rs 358.70, with a total market capitalization of less than 19,000 crore. The scrip had settled at Rs 398.55 in the previous trading session on Wednesday. In its guidance the company management assured to prioritise investments and growth in the business. "We expect overall business momentum to pick up, supported by healthy order book and execution on strategic manufacturing partnerships along with ongoing realisations of cost initiatives driving improvement in operational results," said VV Ravi Kumar, Executive Director and CFO of Laurus Labs. On the other hand, Motilal Oswal said that Laurus Labs reported another quarter of lower-than-expected earnings. There has been a delay in the ramp-up of sales from the CDMO and Non-ARV segments. LAURUS continued to incur operational costs on expanded capacity, which is yet to be utilized optimally. This has affected its performance adversely for 3QFY24, it said. "We cut our PAT estimates factoring in a gradual pick-up in animal health contracts, a delay in scale-up of Non-ARV formulation, and a moderation in pricing of the Non-ARV API products. We value the stock at 25 times 12 months forward earnings to arrive at our target price of Rs 440," it added with a buy rating. Among the global brokerage firms, Citi has maintained a 'sell' rating on Laurus Labs but raised its target price to Rs 315 per share. Another overseas brokerage Jefferies has also maintained an 'underperform' tag on the company and slashed its target price to Rs 250 apiece.
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