Laurus Labs Faces 10 Percent Share Price Slump Post Q3 Earnings Disappointment/AP
Laurus Labs Faces 10 Percent Share Price Slump Post Q3 Earnings Disappointment
Laurus Labs witnessed a significant 10% drop in its share price during Thursday’s trading session, triggered by the release of lower-than-expected Q3 earnings. Brokerages express concerns over the company’s subpar performance on multiple fronts, citing a substantial miss on Street estimates. The share price opened at an intraday low of ₹358.70 on BSE, indicating investor apprehension.
Q3 Financial Performance and Market Analysis
Laurus Labs reported an alarming 89% year-on-year fall in consolidated net profit for the fiscal’s third quarter, amounting to ₹23 crore. This substantial decline, both annually and sequentially, has raised concerns among investors. The company’s revenue also experienced a significant 23% year-on-year fall, attributed mainly to a decline in CDMO and API revenues offset by favorable FDF and Bio.
Management’s Response and Future Projections
V V Ravi Kumar, Executive Director & Chief Financial Officer of Laurus Labs, acknowledged the challenges but emphasized the underlying revenue growth of 6% YoY, excluding the large CDMO PO. The management anticipates a positive shift in business momentum, driven by a healthy order book and strategic manufacturing partnerships. Kumar stated that operating leverage would boost margins above the 20% threshold in the upcoming fiscal year, instilling confidence in the company’s future prospects.
Brokerage Perspectives: Buy or Sell?
Motilal Oswal Financial Services maintains a ‘buy’ call on Laurus Labs, expressing confidence in the company’s capital expenditures and growth projects. The brokerage acknowledges a cut in PAT estimates but values Laurus at 25x 12M forward earnings, setting a target price of ₹440.
On the contrary, Kotak Institutional Equities is cautious, emphasizing the premium valuation of Laurus’ Synthesis segment compared to Syngene. Despite expectations of increased margins, the brokerage retains a ‘SELL’ rating with a fair value of ₹285, factoring in lower sales and higher finance costs. Investors face a divergence of opinions, leaving them to assess the risk and potential rewards associated with Laurus Labs’ current market position.