LAURUS LABS LTD - Q2 FY18

Laurus Labs Ltd posted stable yearly numbers with robust quarterly performance for the second quarter FY18. Consolidated Revenue was reported at Rs. 5386 Mn in the current quarter against Rs. 5254 Mn rising 3% YOY corresponding period previous year with sequential growth of 10%. Consolidated PAT was reported with 25% sequential growth though on yearly basis, numbers were almost stagnant at Rs. 488 Mn in the current September quarter. EBDITA was stable with 3% growth YOY at Rs. 1192 Mn against Rs. 1162 Mn corresponding quarter previous year. Sequentially EBDITA witnessed 15% rise in the current September quarter. Profit Before Tax jumped 6% yearly and 26% QOQ at Rs. 696 Mn in Q2 FY18. Other Income was reported at Rs. 66 Mn compared to Rs. 80 Mn same period previous year. Operating expenditure rose mildly by 2% YOY and was reported at Rs. 4260 Mn against Rs. 4172 Mn same period previous year. In the first half year FY18, the company has invested about 5% of its revenues about Rs. 493 Mn in research & development. EBDITA Margin was reported at 22.13% in Q2 FY18 compared to 22.11% corresponding quarter previous year. Sequential jump was 95 basis points. Interest expenses were lower by 21% YOY at Rs. 195 Mn against Rs. 247 Mn in Q2 FY17. Depreciation & Taxation on the other hand soared 18% & 22% YOY respectively in the current quarter. Net effect, decline in Net Interest Margin YOY by 14 basis points YOY whereas sequential expansion was 113 basis points. One basis point is equivalent to 0.01%. Net Interest Margin was reported at 9.05% against 9.19% same period previous year and 7.92% in the previous June quarter FY18.

Laurus Labs Ltd is a leading pharmaceutical company manufacturing Active Pharmaceutical Ingredients (APIs) for anti-retroviral (ARV), Hepatitis C, oncology and other therapeutic areas. The company has filed 211 patent applications and 46 patents as on 30^th September 2017. The company has leveraged its API cost advantage for forward integration into Generic FDF segment. As on date the company has filed 8 ANDAs and completed 11 validations for formulations. Laurus Labs has also developed its synthesis business through ASPEN & other global innovators. Laurus Labs has announced on 30^th November 2017, approval for Tenofovir Disoproxil Fumarate Tablets 300 mg equivalent to VIREAD tablets 300 mg of Gilead Science Ltd for treatment of HIV – 1 infection in adults and children above 2 years.

 We recommend BUY for the stock with target price of Rs. 695 for medium & long term.

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