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.