1. Citi rates Laurus Laboratories ‘Neutral’, target price of Rs 580

Citi rates Laurus Laboratories ‘Neutral’, target price of Rs 580

Laurus’ global leadership in select, high growth APIs/ therapies and efforts to move up the value chain into formulations augur well for long-term growth.

By: | Published: March 18, 2017 3:11 AM

Laurus’ global leadership in select, high growth APIs/ therapies and efforts to move up the value chain into formulations augur well for long-term growth. However, a lot hinges on execution and the big growth drivers appear over a year away. Valuations are reasonably fair at 22x FY18E EPS (+20% since IPO), and we seek more visibility on long term drivers playing out before getting more constructive. Our TP of R580/share is based on 20x Sept’18E earnings.

We forecast revenues, EBITDA and earnings to grow at 16%, 22% and 40% respectively, over FY16-19E. Longer term, sustenance of efavirenz (vis-à-vis dolutegravir) and outlook on Hep-C sales are key variables to watch. Fig4 provides a snapshot of key revenue drivers.

Key risks are customer and product concentration, slower/ faster than expected ramp up in formulations or synthesis businesses and regulatory compliance hiccups. We initiate coverage on Laurus Laboratories with a ‘neutral’ rating and target price of R580/ share.

Calculate your income tax post budget 2018 through this Income Tax Calculator, get latest news on Budget 2018 and Auto Expo 2018. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top