LAURUSLABS Q2 FY25 earnings call.
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Revenue
₹1,224 Cr
verified against source
Revenue YoY
0%
reported change
EBITDA
₹182 Cr
latest reported figure
Source
screener in enriched
record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Laurus Labs delivered Q2 FY25 revenue of INR 1,224 crore, essentially flat YoY as CDMO growth was offset by weakness in ARV and oncology APIs. EBITDA margin of 15% reflects ongoing operational deleverage from long-cycle CDMO projects consuming capacity without corresponding revenue recognition. Management reaffirmed FY25 EBITDA margin guidance of ~20%, expecting H2 improvement driven by scheduled CDMO project deliveries in Q4. The new small molecule R&D center at IKP Hyderabad (operational since October 2024) and 90 active CDMO projects provide pipeline visibility. Key risks include persistent ARV pricing pressure, potential lenacapavir disruption (though management sees 5+ year runway), and elevated net debt of INR 2,679 crore (Debt/EBITDA at 3.4x). Animal health revenues expected in H2 FY25; meaningful contributions from CDMO agrochemicals and KRKA contract manufacturing likely delayed to Q1 FY26.
Colored figures show movement against the previous available record.
Guidance to track
- Management expects H2 improvement as CDMO project deliveries ramp and operational deleverage cycle concludes. Currently at end of deleverage period.
- FY24 CDMO revenue was INR 922 crore; H1 FY25 achieved INR 553 crore. High-value late-phase clinical projects scheduled for Q4 recognition.
- Current net debt at INR 2,679 crore; management expects improvement based on H2 performance. QIP not being considered at this juncture.
- Historical effective tax rate of approximately 28% applicable for H2 FY25, after lower rate in H1.
Risks flagged
- Gilead issued voluntary licenses for lenacapavir (PrEP). While management sees 5+ year timeline to access markets, analyst questioned whether Laurus will secure license without sterile fill-finish capabilities.
- Analyst pointed out that timing of shipment issues have been cited for 2-3 consecutive quarters to explain API declines. Management deflected by claiming September quarter had higher revenue recognition, but underlying pattern suggests structural issues.
- Operating cash flow negligible in H1; net debt at INR 2,679 crore with Debt/EBITDA at 3.4x. Lumpy Q4-centric revenue pattern means working capital deterioration will recur annually.
- Small LSPL plant (acquired May 2020) received US FDA five observations in December 2023. While import alert has been lifted, recovery timeline remains unclear. Investor questioned why same standards aren't applied to acquired facilities.
Key quotes
- This operational deleverage is not surprising, not unexpected, and going back to your question, how long this will continue, maybe we are at the end of the deleverage.
- Currently, our API sale is about INR 1,500-INR 1,600 crore, and INR 900-INR 1,000 crore is the formulations. It is two-thirds, one-third, roughly, in ARV.
- You are absolutely right. [About operating deleverage haunting for 8-10-12 quarters.] If you ask me when we will leverage, maybe we have to wait few quarters, but we are end of the deleverage right now.
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