Shares of pharma firm Laurus Labs tanked over 11 percent on Monday after the firm reported very weak numbers, missing Street estimates for the quarter ended September 2023 (Q2FY24). Further, weak outlooks by brokerages also kept the sentiment poor.
The stock price shed as much as 11.1 percent to the day's low of ₹355.25. The stock has already shed around 18 percent in the last 1 year and a little over 4 percent this year so far.
The firm's consolidated net profit fell 84.1 percent year-on-year (YoY) to ₹37.12 crore in Q2FY24 as against ₹232.08 crore in the year-ago period. Meanwhile, its revenue lost over 22 percent YoY to ₹1,224 crore in Q2 from ₹1,575.89 crore in the year-ago quarter. It was pulled down by the CDMO-Synthesis segment’s contribution at ₹224 crore from ₹720 crore last year, down 69 percent YoY.
On the operating front, the company's earnings before interest, taxes, depreciation and amortization (EBITDA) also declined over 58 percent YoY to ₹187 crore in the quarter under review versus ₹448.9 crore in the year-ago period. The EBITDA margin also fell to 15.3 percent against 28.5 percent in the year-ago period.
“We delivered sequential recovery in the quarter driven by healthy underlying demand in our product portfolio... expect the overall positive momentum to continue along with realisation of cost initiatives driving improved operational results,” CFO VV Ravi Kumar said.
Sharekhan: The brokerage has a ‘reduce’ call on the stock with a target price of ₹293, implying a downside of over 26 percent.
September quarter witnessed a sequential recovery but numbers were below estimates on all fronts. Laurus' sales missed its sales estimates by 11 percent, EBITDA by 24 percent and profit after tax by 54 percent, said the brokerage.
"Laurus sales were largely impacted by a 69 percent decline in CDMO business owing to high base. Excluding high base, CDMO sales grew 18 percent YoY. A decline in CDMO business and higher other expenses led to an EBITDA margin of 15 percent, 269 bps below our estimates. The management continues to expect FY24 as a year of consolidation on account of higher orders executed in FY23 in the CDMO business resulting in lower product mix and impacting EBITDA margin," it noted.
Kotak: The brokerage downgraded the stock to ‘sell’ with a target price of ₹270, implying a downside of 32 percent.
“After a washout 1Q FY24, Laurus’ stock rallied 20 percent likely on the ‘worst is behind’ narrative, led by anticipated traction in Synthesis. Laurus' Synthesis segment is currently trading at a premium of more than 25 percent higher than Syngene. Considering the significant differences in their capabilities and size, we find it hard to justify this premium," said the brokerage.
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