LAURUSLABS Q2 FY24 earnings call.
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Revenue
₹1,224 Cr
verified against source
Revenue YoY
-22%
reported change
EBITDA
₹188 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Laurus Labs reported Q2 FY2024 revenue of INR 1,224 crore, declining 22% YoY due to a high base effect from large CDMO orders in FY2023. EBITDA margin recovered to 15.4% from Q1's lower level, though gross margins held at 52.5%. The Formulation division showed strong recovery with 120%+ YoY growth to INR 333 crore driven by ARV business rebound and developed market sales, while Oncology API grew over 100% YoY to INR 117 crore. CDMO revenues declined 70% YoY to INR 224 crore due to timing of customer supplies and project execution phases. Management reiterated FY2024 as a 'year of consolidation' given significant capacity additions (3 million liters, 5 billion tablet capacity) that will drive leverage from FY2025 onwards. They expressed optimism for a better H2 and targets returning to ~30% EBITDA margins as new facilities get optimally utilized. The NexCAR19 CAR-T therapy approval represents a major breakthrough milestone.
Colored figures show movement against the previous available record.
Guidance to track
- Management expects margins will be better than the first half based on current growth trends across all segments and healthy order book.
- R&D expenditure guidance maintained at 4.5% of sales for the full year, with higher spend in Q2 due to acquisition of gene therapy IP from IIT Kanpur.
- CEO committed the company will return to approximately 30% EBITDA levels as new CDMO, animal health, and synthesis facilities achieve commercial scale, expected from mid-FY2025 onwards.
- No new commercial CDMO sales expected in next 12-18 months; human health projects moving from phase II to phase III will drive recovery next financial year.
Risks flagged
- Sequential decline in CDMO despite management's Q1 guidance for improvement; timing of customer deliveries remains volatile and dependent on partner requests. Analyst Rohit Jain pressed management on why the expected sequential recovery did not materialize.
- EBITDA margins at 15.4% remain significantly below historical 25%+ levels due to underutilized new capacities and INR 16 crore spent on new initiatives (CGT). Analyst Ranvir Singh questioned whether 20% full-year margin is achievable given H1 performance.
- Management acknowledged pricing pressures in African ARV markets and noted that both ARV API and formulations will 'attain peak revenues soon.' NACO tender win (20% share) is positive but represents a new market rather than offsetting pricing declines.
- Animal health business driven by a single large customer contract; any disruption or loss of this customer could materially impact the synthesis division's recovery timeline.
Key quotes
- We certainly believe so [sustaining oncology run rate] because we have order books well beyond Q4 this year.
- We will get to [30% EBITDA margin]. I'm sure we have an opportunity to take our EBITDA back to around 30% level.
- When we are saying this year will be year of consolidation, that means we are adding a lot of capacity. Once we do commercial manufacturing from those sites, so you will see very healthy EBITDA margins and then return ratios.
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