Pharma sector is amongst the best performers in Indian markets this year. After the coronavirus pandemic transformed global investors’ attention on health-care companies. An Indian pharma company, Laurus Labs share has sailed 404% following the beginning of the current financial year. Examiners at Anand Rathi suppose the stock to gain 29% more. "Based on growing visibility in Formulations as well as in the API segment, we are confident of sustaining the momentum in earnings. We also believe that Laura Labs is well-positioned for continued long term growth," says the brokerage.
Anand Rathi provides a BUY rating to Laurus Labs with a target amount of ₹424 per share in 12 months. The recent market price of Laurus Labs share stands ₹328. Laurus Labs is largely involved in advancing a comprehensive and integrated portfolio of Active Pharmaceuticals Ingredients (API) including intermediates. Generic Finished dosage forms (FDF) and Contract Research services to provide to the necessities of the global pharmaceutical industry.
Recently Laurus has gained 73% stake in Richcore Lifesciences (RICH), a Bengaluru located biotech firm. Laurus has a portfolio with larger than 60 commercialized APIs with a powerful position in ARV, Oncology, anti-diabetic and Hepatitis C therapeutic segments. Further, the organisation has forayed into formulation on a massive range from Unit II in FY20 resulting in primary revenue being provided from that segment i.e. about 29% in FY20 as against around 2% during FY19.
Throughout FY20, the corporation at the consolidated level has accomplished nearby 24% growth in its top-line which were attained at Rs. 28318 million. The increase in revenue is fundamentally attributable to Finished Dosage Form (FDF) segments which have risen to Rs. 8253 million in FY20 from ₹546 million in FY19.
Company's EBIDTA margin has gained from 15.5% during FY19 to 19% during FY20. The profitability has developed due to the change in the proportion of revenue from API to formulations.
In request to strengthen future growth, Laurus has initiated a massive Capex program (Rs 12000 million) of which Rs 5000 million is designated towards formulations, to be generously supported through inner accruals.