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Laurus Labs shares slump to 52 week low after Kotak Institutional Equities downgrades to sell

market | Nov 29, 2022 10:08 AM IST

Laurus Labs shares slump to 52-week low after Kotak Institutional Equities downgrades to sell

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Kotak's price target on Laurus Labs implies a potential downside of 22 percent from Monday's closing level.

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Kotak Institutional Equities believes that the actual extent of margin pressure on Laurus Laboratories is yet to unravel. As a result, the brokerage has downgraded the stock to a sell rating with a price target of Rs 350.
The price target implies a potential downside of 22 percent from Monday's closing level.
The equity research firm believes Laurus Labs’ troubles on antiretroviral (ARV) pricing and the looming cessation of Paxlovid sales are being underappreciated.
Paxlovid is an antiviral medicine that works by stopping the virus that causes coronavirus (Covid-19) from growing and spreading in the body. Notably, ex-Paxlovid, Laurus Labs reported an EBITDA (earnings before interest, tax, depreciation and amortisation) margin of just 19 percent in the first half of the current financial year.
As Paxlovid sales recede, the true extent of margin hit will unravel, Kotak said.
On the other hand, Laurus Labs’ ARV realisation are likely to stay under pressure even as volumes pick up, as the pharma company bids for "winner-takes-all tenders" and lower long-term tender prices, according to Kotak's note.
Shares of Laurus Labs had plunged last month after the company had said that it will only manage to achieve 90 percent of its revenue guidance for the current financial year. It had guided for achieving $1 billion in revenue by financial year 2023.
For the September quarter, the company's revenue increased 31 percent from last year to Rs 1,576 crore, which was higher than the estimate of Rs 1,539 crore. Revenue growth was led by the Synthesis business, which contributed to nearly half of the overall topline.
Shares of Laurus Labs are trading 6.1 percent lower at Rs 422.70. It hit a 52-week low of Rs 419.10 intraday.
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