Sell Laurus Labs, target price Rs 350: Kotak Institutional Equities

Kotak Institutional Equities has sell call on Laurus Labs with a target price of Rs 350. The current market price of Laurus Labs is Rs 418.9 .

Laurus Labs, incorporated in the year 2005, is a Mid Cap company (having a market cap of Rs 22515.36 Crore) operating in Pharmaceuticals sector.

Financials

For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 1577.00 Crore, up 2.36 % from last quarter Total Income of Rs 1540.69 Crore and up 30.73 % from last year same quarter Total Income of Rs 1206.31 Crore. Company has reported net profit after tax of Rs 233.80 Crore in latest quarter.

The company’s top management includes Dr.M Venu Gopala Rao, Dr.C V Lakshmana Rao, Dr.Satyanarayana Chava, Mr.V V Ravi Kumar, Mr.Chandrakanth Chereddi, Dr.Ravindranath Kancherla, Mrs.Aruna Rajendra Bhinge, Dr.Rajesh Koshy Chandy. Company has Deloitte Haskins & Sells LLP as its auditors. As on 30-09-2022, the company has a total of 54 Crore shares outstanding.

Rationale
The brokerage believes Laurus Labs is confronting troubles with regard to antiretroviral (ARV) pricing as well as looming cessation of Paxlovid sales. Ex-Paxlovid, the company reported ~19% EBITDA margin in 1HFY23. Furtherrnore, even as volumes pick up, Laurus’ ARV realization will stay under pressure, as it bids for winner-takes-all tenders and lower long-term tender prices, added the brokerage. The brokerage's revised FY2024E EPS is 34% lower than the Street estimates.

Promoter/FII Holdings
Promoters held 27.27 per cent stake in the company as of 30-Sep-2022, while FIIs owned 26.0 per cent, DIIs 9.34 per cent.