Share of Laurus Labs has delivered more than 500 per cent returns to its shareholders in the last 12 months.
The share stood at Rs 103.58 on June 29, 2020. It has zoomed to Rs 683.40 today, translating into gains of 559 per cent during the period. In comparison, Sensex rose 50 per cent in one year.
Rs 5 lakh invested in Laurus Labs share a year ago would have turned into Rs 32.98 lakh today.
This multibagger stock has gained 90 per cent since the beginning of this year. It opened 1.3 per cent higher at Rs 658.85 against the previous close of Rs 650.65 on BSE.
The share of the pharmaceutical company stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.
“Laurus Labs has done very well in terms of stock performance in the past two years on the back of robust growth in the Active Pharmaceutical Ingredient (API) and Anti-retroviral segment and formulations business,” Jitesh Ranawat, Head Institutional Sales at Marwadi Shares and Finance Ltd, told Business Today.
“The management is targeting revenues of $1 billion by FY23 which is on a strong trajectory. In the US markets, they also have a total of 9 final approvals and 8 tentative approvals out of the 26 ANDA filed so far,” he noted.
“The stock trades at 23x FY23E and can be looked at buying on any declines as the management has also increased its CAPEX guidance to Rs 1500-1700 crore over the next 2 years,” he added.
Recently, the credit rating agency CARE Ratings upgraded the company’s long-term banking facilities to CARE AA from CARE AA- with a stable outlook.
“The revision in the ratings assigned to the bank facilities of Laurus Labs Limited is on account of significant improvement in the total operating income and profitability margins during FY21 driven by volume sales under Formulation Dosage Forms (FDF) and Generic Active Pharmaceuticals Limited (API) such as antiretroviral and oncology segment, generation of healthy cash accruals providing the adequate liquidity comfort, continued incremental demand from existing clientele in non-ARV (Anti-retroviral) segment, completion of strategic acquisitions to augment growth in formulation and synthesis division,” CARE Ratings said in a press release.
“The ratings continue to derive strength from experienced promoters having long-term presence in the pharma industry, strong product portfolio with perceptible presence in ARV, Oncology and Hepatitis C therapeutic segments, reputed and geographically diversified customer base with a strong flow of repeat business mitigating the sustainability of revenue risk, comfortable capital structure and improved debt coverage indicators, regulatory approvals from various regulators for the manufacturing and Research and Development (R&D) facilities of Laurus and stable outlook for the pharmaceutical industry,” the credit rating agency added.
“During FY20 & FY21, Laurus has added new customers which has reduced revenue concentration risk to some extent. The expansion in the scale of operation in formulations segment has resulted in the addition of new customers in LMIC market,” it noted.
The credit rating agency also mentioned that Laurus is exposed to foreign exchange fluctuation risk because of large volume and high-value transactions of export and import, a phenomenon common to the players in the industry.
“However, for Laurus, the risk gets mitigated to a certain extent as the contracts have clause embedded for the exchange rate fluctuation and there is natural hedging through netting off the imports and exports to a large extent,” it added.
“Laurus currently supplies APIs to nine of the 10 largest generic pharmaceutical companies and has an advantage in backward integration. It also has a leadership position in APIs like antiretroviral drugs (ARVs), cardiovascular (CVS) and oncology. It is a major supplier for ARV APIs to other ARV manufacturers and finished drugs in several LMIC markets,” the company said in its financial year 2020-21 (FY21) annual report.
The company reported a three-fold jump in consolidated net profit to Rs 296.92 crore for the quarter ended March 2021. It had posted a net profit of Rs 110.15 crore in the corresponding quarter of the previous financial year. Revenue from operations grew 68 per cent to Rs 1411.93 crore in Q4 compared to Rs 839.14 crore in the year-ago period.
Laurus Labs operate in three business lines – Generics APIs, Generics Finished Dosage Forms (FDFs), and Synthesis/Ingredients. The company is engaged in the manufacturing of APIs for Anti-Retroviral (ARVs), Oncology, Cardiovascular, Anti-Diabetics, Anti-Asthma, and Gastroenterology.