Buy Laurus Labs; target of Rs 340 : Motilal Oswal

Motilal Oswal is bullish on Laurus Labs recommended buy rating on the stock with a target price of Rs 340 in its research report dated April 27, 2023.

Broker Research

April 28, 2023 / 22:54 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Laurus Labs

Laurus Lab (LAURUS) delivered a miss on earnings for 4QFY23, led by a sharp decline in the Synthesis (CDMO) business. The ARV business has been stable QoQ, indicating a decrease in the extent of price erosion in the base portfolio. We cut our earnings estimate by 22%/15% for FY24/FY25 to factor in a) the decline in CDMO business and a gradual pick-up in new contracts, b) slower scale-up in formulation (FDF) business and front loading of opex related to new FDF facility. We value LAURUS at 20x 12M forward earnings to arrive at price target of INR340. While a high base of FY23 would lead to 9% YoY earnings decline in FY24, we believe that the company’s financial performance reached its lowest point in 4QFY23, led by low CDMO sales and front loading of opex for expanded FDF facility. Over the past two years, Laurus has invested almost INR19.4b for expanding its manufacturing capacity. The addition of new contracts for both, CDMO as well as FDF is expected to drive sales/profitability prospects 2HFY24 onwards.

Outlook

It has corrected 48%/33% over the past 12M/6M and is available at 22x/16x FY24/FY25 EPS of INR13/INR18. Maintain BUY.

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