Laurus Labs Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from Laurus Labs Limited (LAURUSLABS) Q2 FY24 Earnings Concall

• Q2 FY24 Results
  • Revenue declined 22% year-on-year to INR1,224 crores..
  • EBITDA was INR188 crores with 15.4% margin.
  • Quarter-on-quarter growth rebounding in API and CDMO business.
  • Healthy order book and partnerships for better H2 performance.
  • New facilities to boost fermentation and biocatalysis expertise
• Updates On Formulation Business
  • Revenues of INR333 crores, up 120% year-on-year due to low base.
  • Sequential growth of 16% driven by recovery in ARV business.
  • Market share growth in developed markets like US, Canada, EU.
  • Added capacity reaching optimal utilization.
• Progress In Generic APIs
  • Revenue declined 8% year-on-year but grew 5% quarter-on-quarter.
  • Growth moderated due to cyclicality in ordering patterns.
  • Oncology API sales grew over 100% year-on-year.
  • Augmenting capacity for oncology APIs to meet demand.
  • Oncology API business grew well driven by market share gains from competitor issues.
  • Strong oncology order book for H2; expect growth to sustain given orders beyond Q4.
  • Overall API growth slower due to capacity additions awaiting commercialization.
• CDMO Business Updates
  • Revenues declined 70% year-on-year due to large prior year projects.
  • Baseline business healthy with growing project pipeline.
  • Progress on new facilities for future growth.
• Strong Growth Across All Business Segments
  • Optimistic about better margins in H2 vs H1.
  • Growth to be driven by increased sales in API, oncology, formulations and CDMO.
  • No major new commercial sales expected in CDMO in H2, only Phase 2 and 3 supplies.
  • Animal health capacity in CDMO started commercial supplies from Oct 2022.
• Synthesis Business Outlook
  • Expects synthesis business to improve next year as projects move into late clinical and commercial stage.
  • This year faced some deferments leading to no sequential growth.
  • New approvals, deals and growing oncology and non-oncology API sales to drive growth.
• Diversification Beyond Pharmaceuticals
  • Entering animal health with contract for multiple products.
  • Diversification makes CDMO business well-rounded compared to competitors.
• Margin outlook
  • Aiming to get closer to 30% EBITDA margins in future.
  • Growth in higher margin CDMO business to help improve margins.
  • Uncertain on which year 30% will be achieved.
• Capex and Utilization
  • Investing significantly in new facilities and capacity expansions across businesses.
  • New synthesis facilities to start contributing from mid FY25.
  • Asset turns between 1-2x expected for new CDMO sites.
• Changing Business Mix
  • Growth to come from non-ARV APIs and formulations.
  • Animal health and crop sciences to start scaling up soon.
  • No major incremental contracts in human health in next 18 months.