Buy Laurus Labs; target of Rs 1280: Motilal Oswal

Buy

Motilal Oswal's research report on Laurus Labs

We visited a manufacturing plant of Laurus and interacted with management on various aspects of its key segments – CDMO and generics formulations. Laurus is witnessing a strong scale-up in CDMO business from global innovator pharma, including rare formulation-level contracts for patented products (beyond API/intermediates). Advanced technology capabilities (ADC, peptides, CGT, fermentation, continuous manufacturing) and strong compliance track record (PAI waivers, approvals) position Laurus for a strong multi-year (5-7 years) growth trajectory in the high-value CDMO business, with deeper innovator relationships. Laurus is scaling up biologics and animal health/crop science with investments, backed by customer demand (e.g., advance-funded spray drying) and a modular expansion strategy, driving higher asset turns and adding new growth verticals beyond core APIs/CDMO. Laurus is also driving a strategic diversification through a JV with KRKA in the generic segment.

Outlook

We remain positive on Laurus on the back of a) its strengthening position in gaining CDMO contracts from global innovator pharma companies, b) addition of a growth lever in the generics space, and c) steady ARV business. We expect 16% CAGR in earnings over FY26-28. We value Laurus at 62x 12-month forward earnings to arrive at a TP of INR1,280. Maintain BUY.

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Laurus Labs - 2003026 - moti