Laurus Labs hits record high on robust September quarter results

Laurus Labs hit record high of Rs 345 after rising 4.5 per cent on the BSE on Friday after the company reported a robust set of July-September quarter (Q2FY21) numbers. The pharmaceutical company's stock surpassed its previous high of Rs 343.20, touched on October 8, 2020.

At 09:26 am, Laurus Labs had erased its morning gain and was trading 1 per cent higher at Rs 332 on the BSE, as compared to 0.26 per cent rise in the S&P BSE Sensex. A combined 3.5 million equity shares had changed hands in the first 10 minutes of trade on the NSE and BSE.

The company’s profit after tax was up 328 per cent year-on-year (YoY) at Rs 242 crore for the quarter on back of strong operational performance. It had posted profit of Rs 57 crore in a year ago quarter. Ebitda (earnings before interest, taxes, depreciation, and amortisation) margins improved 1349 basis points to 32.8 per cent due to better product mix and improved operating leverage.

Revenues grew 60 per cent YoY to Rs 1,139 crore on the back of strong growth across segments mainly driven by nearly three-fold YoY jump in formulations revenue to Rs 452 crore on the back of higher tender business from Low Middle Income Countries (LMIC) and new launches. API (Active Pharmaceutical Ingredient) and CRAMS (contract research and manufacturing services) segments also posted strong growth of 22.4 per cent and 35 per cent YoY growth during the quarter.

The management said the company’s formulations business showcased a growth of over 180 per cent for the quarter, mainly led by higher LMIC business and new launches in various markets, the division now contributed 40 per cent to overall revenues. The generic API division also recorded a healthy growth of 22 per cent for the quarter, led by higher growth in ARV API business owing to higher volumes. Custom Synthesis continues to maintain its growth trajectory with a healthy pipeline and with good visibility, it said.

The company has partnership with global fund offers higher volume contracts with reasonable predictability in FDF tender business. It has a healthy order book for FY 21 & beyond in FDF CMO business with a strategic partner in EU. The robust growth in other API segment to continue on the back of higher order book visibility from key therapeutic segments like CVS, Anti Diabetic and PPIs, it said.

“The Q2FY21 results were way above our estimates on all fronts. Besides continuous improvement in the financial performances, the company is evolving as a strong vertically integrated player with strong order book visibility, improving margin profile, strengthening return ratios and healthy free cash flow (FCF) generation,” ICICI Securities said in a note.

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