Laurus Labs shares tumble 4% regardless of 886% surge in Q2 PAT. Must you purchase the dip?
Income for the quarter stood at Rs 1,653.5 crore, up 35.1% from Rs 1,223.7 crore in the identical interval final yr. Working efficiency was additionally sturdy, with EBITDA greater than doubling to Rs 403.3 crore from Rs 178.3 crore, reflecting a YoY development of 126.2%. The EBITDA margin expanded by 980 foundation factors to 24.4%, signalling improved operational effectivity.
After the Q2 outcomes, listed here are what brokerage corporations are saying:
Goldman Sachs: Promote| Goal worth: Rs
Goldman Sachs has reiterated its “Promote” score on Laurus Labs, whereas revising the goal worth upward to Rs 775 from Rs 750. The brokerage highlighted that the corporate posted a 35% year-on-year (YoY) improve in gross sales and a 126% surge in EBITDA, primarily pushed by sturdy development within the Generic Completed Dosage Kinds (FDF) section, which grew 32% excluding authorities provide engagements (GSe).
Laurus Labs reported margins at 24.4%, supported by a greater product combine and enhanced working leverage. The Contract Growth and Manufacturing Organisation (CDMO) enterprise grew 53% YoY, attributed to late-stage new chemical entity (NCE) momentum and extra manufacturing property. In the meantime, the generics FDF enterprise noticed a sturdy 58% YoY rise, with development being led by the non-antiretroviral section, anticipated to contribute considerably within the second half of FY26.
The corporate’s 400KL Vizag manufacturing facility is scheduled for completion by the tip of 2026. Moreover, Laurus Labs has outlined a Rs 5,000 crore capital expenditure plan over 5 years, specializing in CDMO, biologics, and generics. Though Goldman Sachs upgraded Laurus Labs’ FY27E earnings per share (EPS) by 2–12%, it famous considerations round valuation, viewing the inventory as costly at 54x FY27E price-to-earnings.
Motilal Oswal: Purchase| Goal worth: Rs 1,110
Motilal Oswal has reiterated a “Purchase” score on Laurus Labs with a goal worth of Rs 1,110, citing a better-than-expected Q2 FY26 efficiency. The brokerage famous a 6%, 18%, and 38% beat on income, EBITDA, and PAT, respectively, pushed by larger formulation gross sales backed by strong ARV revenues, superior combine within the CDMO section, and improved working leverage.
The agency highlighted sturdy traction within the human well being CDMO section and ongoing investments in manufacturing property for animal well being and crop science purposes, with validation batches prone to scale up by FY27. Encouraging efficiency was additionally seen within the non-ARV formulation section, which witnessed wholesome sequential development led by new product introductions and better off-take. ARV volumes additionally remained sturdy.
Motilal Oswal raised its earnings estimates for Laurus Labs by 11%, 10%, and 6% for FY26, FY27, and FY28, respectively, factoring in improved ARV prospects, CDMO challenge pick-up, and better generics demand. The brokerage expects a 50% earnings CAGR over FY25–28 and values the inventory at 58x FY27E P/E.
Selection Broking: Purchase| Goal worth: Rs 1,085
Selection Broking maintains a “Purchase” score on Laurus Labs with a goal worth of Rs 1,085, citing the corporate’s strategic evolution from a conventional generics participant to a CDMO (Synthesis)-led mannequin. The brokerage expects the CDMO section to contribute over 30% to revenues within the medium time period.
Margins are projected to broaden to the 23–25% vary, pushed by a beneficial product combine, the high-margin nature of the CDMO enterprise, and advantages from ramping up of latest manufacturing property.
Selection Broking has barely raised its earnings estimates by 0.9% for FY26 and 5.6% for FY27, whereas valuing Laurus at 50x FY27-28 EPS, per prior estimates. The agency believes the valuation is justified given higher development visibility, enhancing margins, and wholesome return ratios. A PEG ratio of 0.94 additionally helps this valuation method.
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(Disclaimer: Suggestions, recommendations, views and opinions given by the consultants are their very own. These don’t signify the views of The Financial Instances)
