Laurus Labs (LAURUS) has posted strong results for the second quarter in a row, with good performance in its Formulation (FDF) and API business. While the CDMO segment did not perform as well as expected in the fourth quarter of FY25, the overall sales continued to grow. As a result, Motilal Oswal has slightly raised its earnings predictions for FY26 and FY27 by 3% and 1%, respectively. This is due to:
- The expected growth from new launches in the FDF segment.
- More product orders in the later stages of clinical trials and the commercial stage, along with better efficiency.
Motilal Oswal values Laurus Labs at 47 times its expected earnings over the next 12 months, giving it a target price of Rs 750. After three years of declining profits, Laurus ended FY25 strongly with a 92% year-on-year growth in profit after tax (PAT).
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The CDMO segment faced challenges over the past two years due to long manufacturing times and higher capital spending. However, with better use of assets, faster project execution in the CDMO business, and new product launches in the FDF segment, Laurus is expected to see strong growth in the coming years. They forecast a 18% growth in sales, 25% growth in EBITDA (earnings before interest, taxes, depreciation, and amortization), and 57% growth in PAT between FY25 and FY27.
Motilal Oswal continues to recommend a BUY rating on the stock.
