Laurus Labs Q2 Results: Margins beat estimates, above 20% for the fourth straight quarter

Laurus Labs Ltd. reported its results for the September quarter on Thursday, October 23, which were higher than analyst expectations on most parameters.Revenue for the quarter increased by 35.2% from the same quarter last year to ₹1,653 crore, which is higher than the CNBC-TV18 poll expectation of ₹1,553.1 crore. Revenue growth during the quarter was supported by robust performance of the CDMO business with contribution from both the FDF and the API business.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter increased by 126% to ₹403 crore. A CNBC-TV18 poll had projected the figure to be ₹368.3 crore.

EBITDA margin for the quarter expanded by more than 1,000 basis points from last year to 24.4%, higher compared to the CNBC-TV18 poll projection of 23.7%. This is the fourth straight quarter that Laurus Labs has reported EBITDA margin in excess of 20%.
Going forward, the management expects margins to be higher aided by better asset utilization, product mix, and operational efficiencies.Net profit for the period stood at ₹195 crore, while the CNBC-TV18 poll had projected the figure to be ₹147 crore. Laurus Labs had reported a net profit of ₹20 crore in the base quarter.

The company’s CDMO business revenue increased by 53% from last year to ₹518 crore, while the generics business revenue increased by 28% from last year to ₹1,135 crore. API business revenue grew 11%, while the FDF business increased by 58%.

On Monday, brokerage firm B&K Securities had initiated coverage on Laurus Labs with a “buy” rating and a price target of ₹1,030. The firm said that Laurus Labs is entering a strong growth cycle led by its high-margin CDMO business, which has gradually emerged as the company’s key earnings driver.

Shares of Laurus Labs are trading 0.9% higher at ₹932.4. The stock trades close to its record high level of ₹944. Shares of gained 51% so far on a year-to-date basis.