Motilal Oswal Reiterates Buy Call on Laurus Labs, Targets Rs 1280

Laurus Labs Research Report

Summary

Our research report on Laurus Labs highlights the company's strong growth prospects in the Contract Development and Manufacturing Organization (CDMO) business. Laurus Labs has seen a significant scale-up in CDMO business from global innovator pharma companies, including rare formulation-level contracts for patented products.

Key Segments

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The company's CDMO business is driven by advanced technology capabilities, including ADC (Antibody-Drug Conjugates), peptides, CGT (Cell and Gene Therapy), fermentation, and continuous manufacturing. Laurus Labs has a strong compliance track record, with PAI (Pre-Approval Inspection) waivers and approvals, positioning the company for a strong multi-year (5-7 years) growth trajectory.

In addition to CDMO, Laurus Labs is scaling up biologics and animal health/crop science with investments, backed by customer demand and a modular expansion strategy. This is driving higher asset turns and adding new growth verticals beyond core APIs/CDMO.

Strategic Diversification

Laurus Labs is also driving a strategic diversification through a joint venture (JV) with KRKA in the generic segment.

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Outlook

We remain positive on Laurus Labs due to its strengthening position in gaining CDMO contracts from global innovator pharma companies, addition of a growth lever in the generics space, and steady Active Pharmaceutical Ingredient (API) business. We expect a 16% Compound Annual Growth Rate (CAGR) in earnings over FY26-28.

Valuation

We value Laurus Labs at 62x 12-month forward earnings, arriving at a Target Price (TP) of INR1,280.

Recommendation

We maintain a BUY rating on Laurus Labs.