ADVERTISEMENT

Laurus Labs Q3 Results: Profit Rises But Misses Estimates

Net profit of the Hyderabad-based pharma and biotech company rose 32% year-on-year to Rs 203 crore in the quarter ended December.

<div class="paragraphs"><p>(Source: Unsplash)</p></div>
(Source: Unsplash)

Laurus Labs Ltd.'s third-quarter profit rose but missed estimates.

Net profit of the Hyderabad-based pharma and biotech company rose 32% year-on-year to Rs 203 crore in the quarter ended December, according to its exchange filing. That compares to the Rs 220 crore consensus estimate of analysts tracked by Bloomberg.

Sequentially, profits fell 13%.

Laurus Labs Q3 Highlights (YoY)

  • Revenue rose 50% to Rs 1,545 crore against the Rs 1,522 crore forecast.

  • Operating profit was up 42% at Rs 404 crore, compared with estimates of Rs 426 crore.

  • Operating margin stood at 26.1%, down from 27.7% a year ago and compared to an estimate of 28%.

Other Highlights (YoY)

  • Generic formulations business generated revenue of Rs 249 crore, a decline of 33%.

  • Growth was impacted by lower demand and adverse price in the anti-retroviral formulations business. The segment recovered in Q3 from Q2 lows and is expected to further normalise, according to the exchange filing.

  • Active pharmaceutical ingredients or API business reported a revenue of Rs 632 crore, up 49%. Other APIs reported a strong growth as new contract supplies ramped up and ARV business witnessed volume led improvement on a low base.

  • Custom synthesis business reported 2.1 times jump in revenue at Rs 642 crore. This growth was supported by favourable market trends along with execution of commercial projects, said the company. It is actively working on over 60 projects and ongoing supplies for four commercial APIs and several intermediates.

  • Laurus Bio segment was soft and clocked Q3 sales of Rs 22 crore. Unexpected downtime in Q3 led to production delays for CMO projects, the company said in the filing.

    Capacity expansion

  • The company expects a gradual ramp-up in its unit-2 brownfield capacity expansion for generic formulations.

  • The expansion in custom development and manufacturing or CDMO capability is on track to include new opportunities and new platform technologies, disclosed the company in the filing.

  • The company’s new capacity implementation at existing site for its bio segment is currently in the ramp up phase. It has also initiated regulatory approval for a sizeable land parcel adjacent to their existing R2. They expect expansion in phased manner. New site will strengthen company’s capabilities in AOF proteins and growth factors, it said.

"Our Q3 and 9M of 2023 results reflect sustained business momentum across our key growth drivers, which is visible in our commercial execution within CDMO, and non-ARVs generic portfolio," said Satyanarayana Chava, founder and chief executive officer at Laurus Labs in the statement. The growth is also supported by an anticipated recovery in the ARV FDF segment, which is likely to continue despite pricing challenges, he said.

“Our recent success with the global funds HIV procurement as ‘panel supplier’ demonstrates our committed to the cause of HIV.” The company will produce ARV drugs for the 2023-2025 period and the supplies will begin from 2024, according to the filing.

VV Ravi Kumar, executive director and chief financial officer at the company said in the filing that they believe their capital allocation framework including commitment towards diversification and strengthening non-ARV portfolio, building niche capabilities, and improving operational efficiency will continue to be in force in creating long-term value.

Shares of Laurus Labs were up 4.5% after results, compared with a 0.07% decline in the benchmark Sensex at 12:18 p.m.