Laurus Labs hits 52-week low on margin concerns
Published On: Tuesday, November 29, 2022 | By: Team KnowMyStock
Shares of Laurus Labs hit a 52-week low at Rs 415 as they slipped 8 percent on the BSE in Tuesday’s intra-day trade in an otherwise firm market on margin concerns and after Kotak Institutional Equities assigned a sell call to the pharma firm with a target of Rs 350. The market cap of the pharma firm fell to Rs 22,504 crore on BSE. A total of 3.67 lakh shares of the firm changed hands amounting to a turnover of Rs 15.56 crore on BSE. Citing that Laurus Labs has witnessed severe pricing pressure and lower volumes in its ARV formulations portfolio for five quarters now, resulting in significant pressure on core margins, the research firm Kotak Institutional Equities downgraded Laurus to sell with a target price of Rs 350, which shows a downside potential of 17% from the current market price of Rs 418.
“We believe Laurus’ troubles on ARV pricing and looming cessation of Paxlovid sales are being underappreciated. Ex-Paxlovid, reported just an around 19 per cent EBITDA margin in 1HFY23. 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. As Paxlovid sales recede, the true extent of the margin hit.
Laurus Labs is an India-based pharmaceutical and biotechnology company. The company is a manufacturer of active pharmaceutical ingredients (API) for antiretroviral (ARV), oncology, cardiovascular, antidiabetics, anti-asthma and gastroenterology. It also develops and manufactures oral solid formulations, which provide contract research and manufacturing services (CRAMS) to other global pharma companies, and produce specialty ingredients for nutraceuticals, dietary supplements and cosmeceuticals.
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