Laurus Labs saw its share price jump 8% in intraday trade on Monday, July 28, hitting a fresh all-time high of ₹901 apiece, even as the Indian stock market remained range bound. The rally followed the company’s strong performance in its June quarter earnings, prompting analysts to raise their target prices for the stock.
Domestic brokerage InCred Equities revised its target price upward to ₹850 from ₹640. However, the stock surpassed this revised target in today’s session. The brokerage, however, maintained its ‘Hold’ rating, stating that the current valuation of 30x/24x FY26F/27F EV/EBITDA and 68x/46x FY26F/27F P/E already reflects most of the positives.
InCred’s FY26F/27F EPS estimates were revised upward by 9%/13%, with the brokerage noting that the earnings recovery is significant.
Meanwhile, Choice Institutional Equities raised its earnings estimates by 2.6%/7.2% for FY26E/FY27E, introduced FY28E, and revised Laurus’ valuation to 50x (from 40x) the average of FY27–FY28 EPS, citing stronger growth visibility relative to peers and anticipated expansion in margins and return ratios. This resulted in a revised target price of ₹1,025, while the brokerage retained its ‘Buy’ rating.
“We believe Laurus is evolving from a traditional generics player to a CDMO (synthesis)-led model, with the segment expected to contribute around 50% of revenues in the long term.
Given the higher-margin profile of CDMO and operating leverage as new manufacturing assets ramp up and current underutilization narrows, it expects sustained margin expansion. “A strong CDMO order pipeline reinforces our long-term growth view,” the brokerage said.
Strong Q1 performance, custom synthesis business outshines
InCred Equities stated that the company continued its recovery momentum for the third consecutive quarter, posting Q1 FY26 results that were above its estimates. The company reported a 30% growth, with gross margin improving by 430 bps QoQ/YoY (driven by a better product mix and lower raw material prices) and EBITDA margin expanding by 10 percentage points YoY to 24.3%, supported by improved gross margins and operating leverage.
During Q1, the custom synthesis (CS) business recorded its fourth consecutive quarter of significant growth, delivering 130% YoY growth driven by several mid-to-late-stage NCE deliveries and contributions from human and animal health segments, which also boosted the company’s consolidated revenue by 31% YoY to ₹1,570 crore.
In the CS segment, the company is witnessing sustained demand for high-value integrated offerings, with the revenue mix shifting toward big and medium-sized pharma companies. The formulations business grew 50% YoY, supported by volume expansion in ARV and developed market sales, along with the execution of contracts entered into last year.
Laurus Labs remains confident about stronger growth in FY26F and expects gross margin improvement from 55% in FY25 to 55–60%, led by an increasing share of the CS business.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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