Motilal Oswal has given Buy recommendation for Laurus Labs recommended buy rating on the stock with a target price of Rs 800 in its research with a target price of Rs. 800 in its research report issued on Jul 06, 2021
Motilal Oswal’s research report on Laurus Labs
Laurus Labs (LAURUS)’s Annual Report Analysis indicates a sharp improvement in ROE, led by a strong head-start in Finished dosage forms (FDF), improving operating profit, and a reduced interest rate. -Since its journey from ARV API to a fully integrated pharmaceutical company over FY06-21, LAURUS is on the path to strengthening its capabilities/capacity in Contract Development and Manufacturing Operations (CDMO) – the Synthesis as well as Biotechnology space. Accordingly, LAURUS is investing INR15-17b in building R&D centers and greenfield/brownfield expansions for a meaningful commercial benefit from FY23. We raise our EPS by 3%/6% for FY22/FY23, factoring in improved business scope in the ARV – Synthesis segment. We raise the PE multiple to 24x (from 18x earlier) as LAURUS fortifies its skillsets across the clinical phase towards (a) commercial manufacturing in the CDMO segment (Synthesis), (b) gaining traction in the Biotech space, and (c) total integration as well as pipeline buildup in the ARV/Non-ARV space.
Accordingly, we arrive at TP of INR800 on a 12M forward earnings basis and reiterate BUY on the stock.