Reduce Laurus Labs; target of Rs 900: Deven Choksey

Deven Choksey's research report on Laurus Labs

Revenue stood at INR 16,530 mn, up 35% YoY and ~8% above our estimate of INR 15,277 mn, driven by strong traction in CDMO and Generics segments. Gross profit came in at INR 9,899 mn, 59.9% gross margin, expanding 470 bps YoY and beating our estimate of 58.3%. EBITDA was INR 4,290 mn, rising 136% YoY and surpassing our estimate of INR 3,341 mn by ~28%, with margin at 26.0% vs est. 21.9%, reflecting improved product mix and cost efficiencies. PAT came in at INR 1,950 mn, up 875% YoY and ~62% ahead of our estimate of INR 1,201 mn, translating to a PAT margin of 11.7% above our estimate of 7.9%, largely aided by higher operating profit. CDMO revenue grew 53% YoY to INR 5,180 mn, driven by late-phase and commercial deliveries in small molecules; bio segment rose 18% YoY, providing incremental leverage.

Outlook

We revise our valuation to 45.0x Sep’27E EPS (from 40.0x), implying a Target Price of INR 900. However, with the stock already trading at 50.4x FY27E EPS, we believe the medium-term positives are largely reflected in current valuations. We revise our recommendation to “REDUCE” from “SELL” while noting that elevated valuations limit upside in the near-term.

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Laurus Labs - 29102025 - deven