First up: Jefferies puts buy rating on Gland, Laurus Labs

Mumbai: Jefferies has initiated coverage on Gland Pharma and Laurus Labs with buy ratings as it believes that Indian contract development and manufacturing companies (CDMO) are seeing a significant order flow improvement along with strong growth visibility. "Several differentiated business models have emerged, and we like the ones where vendors operate in less competitive spaces and those backed by proven management," said Jefferies in a note. The brokerage is betting on Gland Pharma and Syngene for their defendable business models and Laurus for runway growth in the CDMO synthesis business. In the past year, Gland has gained over 65% and Laurus has climbed over 50%.

ET delves into why Jefferies is bullish on these companies:

Gland Pharma


CMP: ₹3,951

Rating: Buy

Jefferies' Target Price: ₹4,566

According to Jefferies, Gland Pharma is a B2B player which has built expertise over several decades in a difficult to master injectables space. The company has a strong record on US Food and Drug Administration audits, which is a differentiating factor, said the brokerage. "The company, being an injectable specialist and contract manufacturer, will benefit from economies of scale and is less exposed to generic pricing risk."

Laurus Labs

CMP: ₹527

Rating: Buy

Jefferies' Target Price: ₹628

Laurus has initiated a large capital expenditure cycle that will increase its gross block by 67% in the next 18 months with investments in API, finished dosage, and custom synthesis. Jefferies said the recent acquisition of Richcore will give Laurus a launching pad in recombinant animal-free food proteins, said Jefferies. The brokerage said Laurus' subsidiary LSPL is building manufacturing facilities that will lend self- sufficiency to the CDMO business going forward.