Shares of Laurus Labs ended 1.44 per cent higher at Rs 443.4 on BSE after KRChoksey upgraded the stock rating to 'Buy' from 'Accumulate'. "The increased multiple is to account for its high likelihood to get back to improved margins over FY25E-FY26E as new projects and animal health and crop protection start realizing," KRChoksey said.
Recently, the company reported its earnings for the fourth quarter. Net profit for the quarter fell 26 per cent year-on-year to Rs 76 crore, compared to Rs 103 crore last year. Revenue for the quarter increased by 4 per cent from last year to Rs 1,440 crore.
"Laurus Labs’ high-value CDMO segment has started inching up sequentially in Q4FY24 on the back of 10 commercialized projects and is expected to accelerate further on the back of animal health and crop science gaining traction along with the rise in profitability over FY24-FY26," KRChoksey said.
It noted that the company is working on 70 active projects while 10 are being commercialized for several APIs and intermediates under CDMO and custom synthesis. The crop protection unit is under construction and the animal health unit has started commercial validation supplies as well as scaling up. The incremental capacity has been fully contracted with Big pharma customers.
"Stability in ARV coupled with growth in FDF on the back of approved product dossiers, ANDAs and JV with KARKA, and capacity expansion in Bio should also act as tailwinds," it added.
The broking firm expects the company to see Revenue/ EBITDA/ PAT CAGR of 23.2%/ 51.1%/118.2%, respectively over FY24-FY26. "The stock is trading at 104.9x/30.9x our FY25E/FY26E EPS. We apply a multiple of 35.6x (earlier 30.0x) on FY26E EPS of Rs 14.1 (unchanged) and arrive at a revised target price of Rs 503, (earlier Rs. 424)," it said.
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