Laurus Labs drops up to 5% after Kotak downgrades stock, sees 26% downside
Explaining the rationale behind the bearish call, Kotak said that at the current market price, Laurus’ Synthesis segment is trading at a premium of more than 25 percent to Syngene.
Laurus Labs Ltd shares dropped more than 4 percent in trade Tuesday after analysts downgraded the stock due to higher valuations and downside risks to projected sales of Rs 2,030 crore from the synthesis vertical in fiscal 2025.
Analysts at Kotak Institutional Equities downgraded their recommendation on Laurus Labs shares to ‘Sell’ at a target price of Rs 300, implying a potential downside of 26 percent from Monday’s closing price.
Explaining the rationale behind the bearish call, the brokerage stated that at the current market price, Laurus’ Synthesis segment is trading at a premium of more than 25 percent to Syngene.
“Given prevalent variance in capabilities and scale, believe this is difficult to justify,” the brokerage noted.
The company had reported a 57 percent year-on-year decline in synthesis segment revenue at Rs 250 crore in the April-June quarter of FY24 given large PO supplies in the previous year.
“Given steep ask-rate from the current Rs 1,000 cr annual run-rate there still remains a downside risk to lowered assumption of Rs 2,030 crore synthesis sales in FY2025E,” the brokerage said.
The brokerage also noted that after a washout in the first quarter of FY24, Laurus’ stock rallied 20 percent likely on the ‘worst is behind’ narrative.
Laurus Labs had reported a 23.2 percent decline in revenue at Rs 1,182 crore for the April-June quarter of FY24 over the year ago period.
The June quarter was challenging for the company driven by lower revenues and higher upfront cost and also rescheduling of some of the supplies by customers and global ARV agencies.
Laurus Labs on Monday announced that it has increased its stake in Laurus Bio Private Limited to 87.58 percent by purchasing 37,641 equity shares for Rs 71.60 crore.
Laurus Labs shares dropped around 5 percent to touch alow of Rs 384.70 apiece on BSE in morning deals.
The stock was trading 4.87 percent lower at Rs 387.05 apiece on BSE at 11.28 AM on Tuesday.
First Published: Sept 12, 2023 12:45 PM IST
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