This acquisition marks Laurus Labs’ entry into the broader biologics and biotechnology segments, providing the company access to its high growth areas, globally and in India. Laurus Labs
will help and drive Richcore to achieve scale and improve product offerings. With this acquisition, Laurus adds a fourth revenue stream to its three existing divisions - API, Formulations and Synthesis. Following the successful closure of the transaction, Richcore will be renamed to Laurus Bio Pvt Ltd, it said.
Post event update, Motilal Oswal Securities maintains ‘buy’ rating on Laurus Labs with target price of Rs 410 per share.
“The acquisition is a step towards building a vertically integrated biotech segment and adds a new lever to growth. It particularly provides capabilities in high growth areas of Recombinant (Rh) Proteins, Enzymes and Biological Contract Development and Manufacturing Organization (CDMO),” the brokerage firm said.
“We raise our FY22E/FY23E EPS estimates by 3 per cent to arrive at our target price of Rs 410/share, on 18x 12M forward earnings, to reflect benefits of this deal accruing to Laurus. Considering the addition of technology-based high entry barriers/superior RoCE business, we expect the RICH-led CDMO business to result in a re-rating of Laurus once it starts contributing meaningfully to earnings over the next 4-5 years”, it said.
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