Categories Concall Highlights, Earnings, Health Care

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.

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