Laurus Labs shares fall 10% despite strong management guidance, product launch plans

Laurus Labs reported December quarter results that missed expectations on all fronts. The company's net profit fell to ₹20 crore from ₹200 crore last year, while revenue also declined by 22% due to a high base. The management said that adjusted for a large purchase order in the base quarter, the revenue growth in the December quarter would be 11%.

For the quarter ending December, the company's net leverage or net debt to EBITDA on a trailing 12-month basis stood at 3x from 1.9x in September and 1.3x during the same quarter last year.

Brokerage firm Citi has maintained its sell recommendation on the stock with a price target of ₹315. The brokerage said that negative operating leverage due to growth investments is keeping margins under pressure. While a continued ramp-up in formulations sales was a positive, Citi has cut Laurus' financial year 2024 - 2026 EBITDA estimates by 9% to 11% respectively.

Jefferies has also cut Laurus Labs' price target to ₹250 and maintained its underperform rating, saying that the management commentary on the recovery in its CDMO business is uninspiring and indicated a much slower ramp-up compared to expectations. As a result, Jefferies has also cut Laurus' financial year 2025 and 2026 Earnings per Share (EPS) estimates by 19% and 26% respectively.

Shares of Laurus Labs are currently trading 6.3% lower at ₹375.65.