Release Date: January 24, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Laurus Labs Ltd (BOM:540222, Financial) reported strong growth in Q3 2025, with revenue increasing by 18% year-on-year, driven by robust demand in the CDMO business.
- The company maintained healthy gross margins above 50% for several quarters, with EBITDA margins improving to 21.1% due to better operating leverage.
- Laurus Labs Ltd (BOM:540222) achieved the highest quarterly sales for the CDMO division in the last eight quarters, reflecting a 33% growth on a nine-month basis.
- The company is expanding its R&D capabilities, including a new small molecule R&D center and a large-scale fermentation capacity, expected to be ready by the end of 2026.
- Laurus Labs Ltd (BOM:540222) has a strong pipeline with over 90 active projects, including collaborations with big pharma partners, indicating potential for future growth.
Negative Points
- The ARV API business saw a decline in revenues by 7% due to lower volume uptake, impacting overall performance.
- Despite improvements, the company's profit after tax for Q3 was relatively low at 22 crores, with a ROSI of 6.8% due to continued CapEx investments.
- The company faces challenges in capacity utilization, with some assets still ramping up, affecting operational efficiency.
- Laurus Labs Ltd (BOM:540222) has not provided specific guidance on the number of new product commercializations, creating uncertainty about future revenue streams.
- The company is heavily investing in CapEx, with a net debt of 2,766 crores, which could pose financial risks if expected growth does not materialize.
Q & A Highlights
Q: Can you provide an update on the progress of ImmunoACT and the gene therapy phase one at IIT Kanpur?
A: Dr. Satyanarayana Chava, CEO: ImmunoACT has obtained DCGI approval to conduct clinical trials for BCMA, moving from a single product to a multi-asset company. The gene therapy assets from IIT Kanpur are progressing well, with more updates to come in future quarters.
Q: Given the interchangeable nature of reactors, would Laurus Labs switch from ARV to higher-margin products if needed?
A: Dr. Satyanarayana Chava, CEO: Currently, we are not struggling for capacities, and ARV remains a significant cash cow. However, if necessary, we have the capability to repurpose reactors for other APIs.
Q: How do you see the trajectory of ARV versus non-ARV revenue going forward?
A: Dr. Satyanarayana Chava, CEO: We do not anticipate growth from the ARV franchise, expecting it to stabilize at around 650 crore per quarter over the next few years.
Q: When will the new bio-artery plant become operational?
A: Dr. Satyanarayana Chava, CEO: The bio-artery plant is expected to be operational by the end of 2026.
Q: What drove the strong growth in the CDMO business this quarter, and is it sustainable?
A: Dr. Satyanarayana Chava, CEO: Growth came from both human and animal health CDMO, with a robust pipeline and late-stage APIs contributing. We expect this division to continue performing well.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
