Dolat Capital Market has given Buy recommendation for Laurus Labs with a target price of Rs. 426 in its research report issued on Jan 31, 2021
Dolat Capital Market’s research report on Laurus Labs
Laurus reported robust 3Q beating our estimates primarily driven by stellar growth in first line ARV APIs such as Efavirenz and DTG. Both gross and EBITDA margins at 55% and 31% for 9MFY21 have been strong despite higher contribution from ARV API, implying stable pricing and higher volumes. Further, leveraging its backward integration, Laurus has demonstrated commendable execution capability in the formulations segment and remains confident of growth sustenance in near term. Basis the outperformance, we raise our earnings estimates by 10% each for FY21/22. We project 17% PAT CAGR while top-line is expected to grow at 15% CAGR over FY21-23E with EBITDA margins higher at 30% as the product mix changes from low margin ARV APIs to high margin products in API, formulation (Cardiac and diabetes) and CDMO.
At CMP, the stock trades at 19.4x FY22E and 16.1x FY23E. Our target price of Rs426 values the stock at 19x FY22 earnings. Maintain BUY.