We believe LAURUS is evolving from a traditional Generics player to a CDMO (Synthesis)–led model, with the segment targeted to reach 30%+ of revenues in the medium term. We expect margins to see a healthy expansion (23-25% range) given the change in product mix, higher-margin profile of CDMO, and operating leverage from new manufacturing assets ramp-up. We raise our earnings estimates by 0.9%/5.6% for FY26E/FY27E.
OutlookWe value the company on an average of FY27-28 EPS estimates at 50x (unchanged), reflecting stronger growth visibility relative to peers and anticipated expansion in margins and return ratios. This results in a TP of INR 1,085 (Q1FY26: INR 1,025), and we maintain our BUY rating on the stock. A sanity check on the PEG ratio (0.94) further supports our valuation.
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