- 25 Oct 2024
- ICICI Securities
LAURUS Q2FY25 – MUTED NUMBERS BUT RECOVERY IN CDMO ENCOURAGING
News: Sales were flat at ₹ 1224 crore as ~34% growth in CDMO to ₹ 299 crore was neutralised by ~11% de-growth in generic APIs to ₹ 557 crore and ~1% de-growth in Formulations to ₹ 328 crore. EBITDA de-grew ~5% YoY to ₹ 179 crore and margins stood at 14.6% despite GPM growth of 268 bps to 55.2% mainly on account of higher employee and other expenses. PAT de-grew 54% to ₹ 18 crore.
Views: CDMO growth was driven by significant resource allocation towards multiple high value complex programs in various clinical phases. API growth during the quarter was down due to significant dent in Oncology APIs due to competition. Formulations growth was impacted mainly due to lower volume offtake in ARV business while Developed market delivered good growth despite pricing pressure in the US. Going ahead, the management is guiding for 20% EBITDA margins for FY25, which means significant margins traction in H2 as H1 margins stood at 15%. The management is sounding upbeat on CDMO fortunes but improving momentum for APIs and formulations seems to be a challenge. The company continues to derive ~46% of sales from ARVs (API+Formulations; H1) which remain lumpy. Thus, the improvement in performance continue to hinge on the performance of CDMO.
Impact: Neutral