Laurus Labs Rally Sparks Rerating Buzz Amid CDMO Growth

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StockEdge predicts rerating chance for Laurus Labs after 43% gains in stocks in one month

By S JHA

MUMBAI, July 28, 2025 — Laurus Labs has rallied nearly 43% in the last three months and a remarkable 99.5% over the past year, massively outperforming both the Nifty Pharma and Nifty 50 indices. According to a note shared on StockEdge’s Telegram channel, the surge may only be the beginning of a larger long-term rerating story powered by aggressive expansion and booming CDMO business.

StockEdge said that Laurus Labs posted impressive numbers for Q1 FY26:

Revenue: ₹1,570 Cr (↑31.4% YoY)
Net Profit: ₹161 Cr (↑1219% YoY)
EBITDA Margin: ₹382 Cr (+1050 bps YoY)
ROCE: Improved from 9.7% to 12.7%

CDMO: The Next Big Growth Engine

The Contract Development and Manufacturing Organisation (CDMO) segment clocked ~₹493 Cr in revenue, marking a 130% YoY jump, led by strong interest from big pharma and late-stage projects. StockEdge analysts see this as the single biggest growth lever for Laurus, with CDMO expected to contribute up to 50% of total revenue in the coming years.

Business Mix Shifts: Decline in API, Surge in FDFs

While the API business saw a 4% YoY decline—largely due to weak anti-retroviral (ARV) sales—the generic Finished Dosage Formulations (FDF) segment surged 50% YoY. “ARV-related API and formulations still contributed around ₹640 Cr, showing there’s gas left in the tank despite the headwinds,” added StockEdge in its note.

Massive ₹5,000 Cr Capex Plan in Play

Laurus has lined up an aggressive ₹5,000 crore capital expenditure over the next five years, which includes:

A microbial fermentation facility in Vizag
Investments in gene therapy and antibody drug manufacturing
A new JV with KRKA for an FDF plant in Hyderabad

Stock Momentum Strong Across Time Frames

Laurus Labs’ stock has shown extraordinary performance:

1-month: +27.6%
3-month: +43%
6-month: +75.4%
1-year: +99.5%

The Laurus Labs stocks are trading at 94 PE multiple while the face value of the shares is ₹2. Momentum scores are also bullish:

1M: 78/100
3M: 77/100
6M: 85/100

Risks to Monitor

Despite the bullish outlook, StockEdge flags a few headwinds:

High Capex burden may lead to rising debt (currently at ₹2,388 Cr)
Ongoing API de-growth
Potential execution challenges in the biologics segment

With strong visibility in CDMO orders, a futuristic manufacturing pipeline, and a shifting product mix toward high-margin segments, Laurus Labs is being closely watched by investors for a possible rerating, said analysts at StockEdge.

(Disclaimer: This article makes no recommendation for buy or sell of shares of any company)

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