Laurus Labs Limited , a leading pharmaceutical company, has reported robust financial results for the second quarter of fiscal year 2026, demonstrating significant growth and improved profitability.

Financial Highlights

• Revenue: INR 1,653.00 crores, marking a 35% growth
• Gross Margins: Approximately 60%
• EBITDA Margins: 26%, representing an 11 percentage point expansion

Business Segment Performance

ARV Business

• Contributed INR 733.00 crores, up from INR 647.00 crores in the previous quarter
• API sales: INR 395.00 crores
• Formulation sales: INR 338.00 crores

CDMO Division

• Recorded sales of INR 471.00 crores for the quarter
• H1 sales of INR 964.00 crores, showing 88% growth
• Growth driven by mid-to-late phase program deliveries and commercial supplies

Laurus Bio (Large Molecule CDMO)

• Reported a recovery with sales of INR 47.00 crores in Q2

Strategic Developments

1. Land Allotment: Received 532 acres from the Andhra Pradesh government in Vizag

   • Plans to invest $600.00 million over 8 years for a pharmaceutical manufacturing complex

2. ADC Technology Investment: Invested $2.00 million in an ADC technology platform company

   • Enhances Laurus Labs' integrated ADC services capabilities

3. Capacity Expansion:

   • Current fermentation capacity: 200,000 liters in Bangalore
   • Adding 400,000 liters in Vizag (Phase 1)
   • Plans for additional 500,000-600,000 liters in Phase 2

4. New Modalities: Continued investments in fermentation, gene therapy, and ADC capabilities

Financial Outlook

• ARV Sales Guidance: Maintained at INR 2,500.00 crores (±INR 200.00 crores) for the full year
• Capex Plan: Estimated at INR 1,000.00 crores for the current year
• Long-term Capex: Approximately INR 8,000.00 crores over the coming years

Management Commentary

Dr. Satyanarayana Chava, Founder and CEO, commented on the results: "We continue to make encouraging progress in delivering important clinical and commercial programs for our customers and strengthening our pipeline through collaborations with several big pharmas. Our growth is increasingly benefiting from our leadership position in the anti-retroviral business as well as CDMO expansion."

The company's focus on R&D-driven commercial strategy and investments in enabling capabilities and capacities is expected to generate long-term value for all stakeholders.

Conclusion

Laurus Labs' strong performance in Q2 FY26 reflects its robust business model and strategic initiatives. The company's expansion plans and investments in new technologies position it well for sustained growth in the pharmaceutical industry.

Laurus Labs , a prominent pharmaceutical company, has announced a significant upward revision in its gross margin expectations, revealed ambitious expansion plans, and committed to improved EBITDA margins, signaling a positive outlook for the company's future growth. However, the market reaction and analyst opinions remain mixed.

Improved Margin Expectations

Laurus Labs has raised its gross margin forecast to approximately 60%, a substantial improvement from its earlier projections of 55% and 50%. The company attributes this enhancement to:

1. Overall business growth
2. Stronger positions in key segments:
   • Antiretroviral (ARV)
   • Oncology

Furthermore, the company has committed to delivering improved EBITDA margins in FY27 compared to FY26, indicating expectations for enhanced profitability.

Financial Projections and Capital Expenditure

The company has shared the following financial projections:

Laurus Labs expects improved EBITDA margins through:

• Focus on small and large molecule CDMO operations
• Better asset utilization

Expansion Plans

Laurus Labs has announced:

• A $600.00 million investment over 8 years
• Development of a new 530-acre manufacturing complex
• This facility will be separate from existing operations

Operational Efficiency Goals

The management has set a target to increase asset turnover from 0.90 to 1.10, indicating a focus on improving operational efficiency and resource utilization.

Recent Financial Performance

Despite the positive outlook, Laurus Labs shares declined 0.50% to ₹929.75 following the announcement of its quarterly results. The company reported:

• 35.1% year-on-year revenue growth to ₹16.5 billion
• EBITDA margin expansion of 980 basis points to 24.4%
• 58% year-on-year growth in both synthesis business and formulation sales, with formulations reaching ₹5.2 billion

Divided Analyst Opinions

Analyst opinions on Laurus Labs' performance and valuation are sharply divided:

• Domestic brokerages (Motilal Oswal, DAM Capital, and CIE) maintained Buy ratings with target prices between ₹1,083-₹1,110, citing earnings upcycle and CDMO scale-up.
• Foreign brokerages expressed caution about premium valuations:
  • Goldman Sachs and Kotak Securities issued Sell ratings with targets of ₹775 and ₹625 respectively.
  • Jefferies maintained an Underperform rating with a ₹700 target, expressing concerns about the announced $600 million capex over eight years for the new Vizag site.

Conclusion

Laurus Labs' revised forecasts, expansion plans, and commitment to improved EBITDA margins reflect the company's confidence in its growth trajectory and market position. The substantial investments in new manufacturing facilities, coupled with improved margin expectations, suggest that the company is positioning itself for long-term growth in the pharmaceutical sector. However, the mixed market reaction and divided analyst opinions highlight the complexities surrounding the company's valuation and future prospects. Investors and market watchers will likely keep a close eye on how these plans materialize and impact the company's financial performance in the coming years.