Laurus Labs Ltd:Annual Report 2023-24 Analysis

Laurus Labs Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Laurus Labs was founded in 2005 by Dr. Satyanarayana Chava.

Headquarters Location and Global Presence:

The company’s headquarters are located in Hyderabad, India. Laurus Labs has a global presence with operations and partnerships across North America, Europe, and Asia.

Company Vision and Mission:

• Vision: To be a leading, integrated research-driven pharmaceutical and biotechnology company.
• Mission: To accelerate discovery, development, and manufacturing of affordable healthcare solutions.

Key Milestones in Their Growth Journey:

• 2005: Laurus Labs established.
• 2007: Started contract manufacturing operations.
• 2012: Entry into Finished Dosage Forms (FDFs).
• 2016: Initial Public Offering (IPO).
• Ongoing: Capacity expansions and strategic acquisitions to expand product portfolio and geographical reach.

Stock Exchange Listing Details and Market Capitalization:

Laurus Labs is listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Recent Financial Performance Highlights:

• The company has experienced growth in revenue and profitability in recent years.

Management Team and Leadership Structure:

• Dr. Satyanarayana Chava: Founder & CEO

Any Notable Awards or Recognitions:

• The company has received awards for its R&D efforts, sustainability practices, and manufacturing excellence.

Their Products #

Complete Product Portfolio with Categories:

Laurus Labs operates across several key segments:

• Active Pharmaceutical Ingredients (APIs): Focusing on anti-retroviral (ARV), oncology, cardiovascular, anti-diabetic, and other therapeutic areas.
• Finished Dosage Forms (FDFs): Generic formulations of ARVs, oncology drugs, and other medications.
• Contract Development and Manufacturing Organization (CDMO): Providing services for drug development and manufacturing to pharmaceutical companies.
• Synthesis: Advanced intermediates and custom synthesis for other pharmaceutical companies.
• Ingredients: Specialty ingredients.

Flagship or Signature Product Lines:

• ARV APIs and FDFs are a significant part of their product portfolio.

Key Technological Innovations or Patents:

• Laurus Labs focuses on developing innovative and cost-effective manufacturing processes for APIs and FDFs.

Manufacturing Facilities and Production Capacity:

Laurus Labs has multiple manufacturing facilities in India, equipped to produce APIs, FDFs, and intermediates.

Quality Certifications and Standards:

• The company’s manufacturing facilities are compliant with international regulatory standards, including USFDA, EDQM, and WHO-GMP.

Any Unique Selling Propositions or Technological Advantages:

• Backward integration for key raw materials, enabling cost competitiveness and supply chain control.
• Strong R&D capabilities for process development and new product innovation.

Recent Product Launches or R&D Initiatives:

• Laurus Labs continuously invests in R&D to expand its product pipeline and develop innovative manufacturing processes.

Primary Customers #

Target Industries and Sectors:

• Pharmaceutical industry
• Generic drug manufacturers
• Research and development organizations

Geographic Markets (domestic vs. international):

• Laurus Labs has a significant presence in both domestic and international markets.

Distribution Network and Sales Channels:

• The company utilizes a direct sales force and distributor network to reach its customers.

Major Competitors #

Direct Competitors in India and Globally:

• Direct competitors include other major API and FDF manufacturers.

Competitive Advantages and Disadvantages:

• Advantages: Cost-effective manufacturing, backward integration, and strong R&D capabilities.
• Disadvantages: Dependence on ARV market, intense competition.

How they differentiate from competitors:

• Focus on innovation, cost leadership, and customer service.

Industry Challenges and Opportunities:

• Challenges: Price erosion, regulatory changes, supply chain disruptions.
• Opportunities: Growing demand for generic drugs, expansion into new therapeutic areas, and CDMO services.

Market Positioning Strategy:

• Laurus Labs aims to be a leading player in the API and FDF markets, with a focus on innovation, cost leadership, and customer service.

Future Outlook #

Expansion Plans or Growth Strategy:

• Expansion into new therapeutic areas, such as oncology and cardiovascular diseases.
• Increasing focus on CDMO services.
• Continued investment in R&D.

Sustainability Initiatives or ESG Commitments:

• Laurus Labs is committed to sustainable business practices.

Industry Trends Affecting Their Business:

• Increasing demand for generic drugs.
• Growth of the CDMO market.
• Focus on environmental sustainability.

Long-term Vision and Strategic Goals:

• To become a leading global pharmaceutical company with a diversified product portfolio and a strong focus on innovation.

Laurus Labs Limited: FY2024 Performance Analysis #

Financial Performance (3-Year Trend Analysis) #

• FY2024 Overview: Laurus Labs reported consolidated revenue from operations of ₹5,041 crore, a 17% decline from ₹6,041 crore in FY23. This decline was primarily attributed to the completion of a large Purchase Order (PO) supply in FY23. Excluding this PO, core business revenue grew by 9%. EBITDA stood at ₹798 crore (15.8% margin), a 50% decrease from ₹1,594 crore (26.4% margin) in FY23, impacted by lower asset utilisation and upfront costs for growth projects. Profit After Tax (PAT) was ₹161 crore, down 80% from ₹790 crore in FY23. Gross margin remained relatively resilient at 51.7% (vs. 54.1% in FY23).
• Trend Analysis (Primarily FY24 vs. FY23): The provided data indicates a significant contraction in key financial metrics (Net Sales, EBITDA, PAT, EPS, ROCE, ROE) in FY24 compared to FY23, largely due to the high base effect of the FY23 PO. The dividend payout ratio was maintained at 19% (₹0.80 per share total interim dividend declared for FY24). Net worth saw a modest increase to ₹4,111 crore from ₹4,038 crore. The Debt-Equity ratio increased to 0.61 from 0.49, reflecting increased borrowings (total debt ₹2,507 crore vs. ₹1,972 crore) primarily to fund growth capex.

Business Segment Performance (FY2024) #

• Generics API: Revenue declined by 2% YoY to ₹2,545 crore. ARV API revenue was steady (+1%), and Oncology API saw strong demand (+27%). However, the non-ARV/non-oncology segment declined by 22% due to lower demand and competitive pricing pressures. Focus remains on leveraging large-scale capacity and expanding market share.
• Generics FDF: Revenue grew strongly by 24% YoY to ₹1,414 crore, driven by stabilizing ARV business, volume growth in developed markets, and increased CMO activity. The JV with KRKA is expected to enhance the portfolio and market presence. 8 product dossiers were filed, and 9 approvals received.
• CDMO - Synthesis: Core business (excluding the large FY23 PO) grew by 24% YoY to ₹922 crore. Performance was driven by increased RFPs, progress on late-phase NCE projects, and a new multi-year MSA with a crop protection company. Animal Health DS validation commenced.
• Biotechnology: Revenue increased by 28% YoY to ₹160 crore, led by CDMO services leveraging biocatalysis expertise. R-2 downstream debottlenecking was completed. Investment in a new microbial fermentation facility in Vizag commenced.

Major Strategic Initiatives and Progress (FY2024) #

• Innovation & R&D: R&D spend was 4.8% of revenue (₹241 crore). Launched NexCAR19 (India’s first CAR-T therapy via associate ImmunoACT). Increased stake in ImmunoACT (to ~34%) and Laurus Bio (to 87.58%). In-licensed 4 gene therapy assets from IIT-Kanpur and initiated construction of a GMP facility. Advanced ODF technology (US FDA approval for paediatric DTG) and sterile injectable platforms. Expanded biocatalysis and flow chemistry projects.
• Expansion & Capacity Building: Invested ₹700 crore in capex, largely for CDMO/API capabilities. Commissioned two GMP production plants for Animal Health. A new dedicated R&D center (small molecules/high potent) is set for commissioning in Q2 FY25. Commenced construction of a $40 million microbial fermentation facility in Vizag. Doubled Drug Product capacity to 10 bn units/year. API capacity increased by 30% over 24 months to 7.75 ML KL.
• Partnerships & Market Development: Secured a multi-year CDMO MSA with a leading crop science company. Formed a 51:49 JV (Krka Pharma Pvt. Ltd.) with KRKA (Slovenia) with up to €50 million phased investment for FDF manufacturing and market expansion. Deepened cooperation with major CDMO clients on green/sustainable platforms. Served 6 out of the top 10 global innovators.

Risk Landscape #

• Key Risks: The company identifies operational (capacity planning, EHS), strategic (industry downturn, competition, innovation lag), financial (forex fluctuations), and compliance (regulatory changes/approvals) risks.
• FY24 Context: The year highlighted sensitivity to ARV pricing pressure and competitive intensity in the generics space. Supply chain de-risking due to geopolitical factors presents both risk and opportunity. Delays in regulatory approvals or partner clinical programs remain potential threats. Forex risk is managed via hedging.
• Mitigation: Strategies include capacity monitoring, safety programs (SANKALP), BCP development, market diversification, economies of scale, R&D investment for niche products/process efficiency (flow chemistry, biocatalysis), cost reduction initiatives, and robust compliance systems. The risk management framework involves Board oversight via dedicated committees (Risk Management, Audit).

ESG Initiatives and Metrics (FY2024) #

• Environmental: Consumed 9% renewable energy (primarily solar). Recycled 284,801 KL water. Total energy consumption was 3,469,230 GJ. Scope 1, 2, and 3 emissions were reported as 198,782 tCO2e, 176,678 tCO2e, and 87,212 tCO2e respectively. Recycled/reused 22,884 tonnes of waste. Key initiatives included waste heat recovery, VFDs, temperature controls, movement sensors, and EV transition. Committed to SBTi. All sites ISO 14001 certified.
• Social: Employed 6,735 permanent staff (7.5% women). Achieved Zero Lost Time Injury Rate (LTIFR). Invested ₹23.31 crore in CSR across 25+ community programs (health, education, environment, skills). Certified as a Great Place to Work (5th consecutive year). 64,977 hours spent on H&S training. Implemented SANKALP safety initiative. All sites ISO 45001 certified.
• Governance: Maintained Board independence at 57% (exceeding mandate). 14% women directors. Rated ‘BBB’ by MSCI ESG, Silver by EcoVadis, and improved S&P Global ESG Score to 59. Robust Code of Conduct, Whistleblower Policy, and grievance mechanisms are in place. 100% employees trained on Code of Conduct.

Management Outlook (FY2025) #

• Management expects robust growth in FY25, focusing on unlocking sustainable and profitable growth through enhanced technology breadth and commercial excellence.
• Key priorities include improving operating margins via better asset utilization and productivity gains, delivering on late-phase commercial NCE opportunities within CDMO, and scaling up growth projects.
• Anticipated API pricing headwinds are expected to be offset by volume increases and cost improvements.
• Strategic capex will continue, prioritising high-value segments and enhancing scientific capabilities (e.g., new R&D center, Vizag fermentation facility).
• The KRKA JV and Crop Science MSA are expected to contribute to diversification and growth.
• Continued focus on scaling Animal Health and AgChem CDMO businesses.
• Commitment to advancing Cell and Gene Therapy initiatives (NexCAR19 expansion, IIT-Kanpur facility).

Detailed Analysis #

Financial Position Analysis #

Consolidated Financial Position #

Comparative Financial Position (Consolidated) #

(Note: Analysis based on FY24 and FY23 data.)

Significant Changes in Major Line Items (>10% YoY - Consolidated) #

Working Capital Trend (Consolidated) #

Analysis: Net Working Capital decreased significantly by ₹336.66 Cr in FY24. This was primarily driven by a substantial increase in Trade Payables (+₹340.59 Cr) and Current Borrowings (+₹207.21 Cr), which more than offset the increase in Inventories (+₹159.82 Cr) and Trade Receivables (+₹86.73 Cr). The Cash Conversion Cycle improved, reducing from 97 days to 89 days, mainly due to the extension of payable days, despite increases in inventory and receivable holding periods.

Asset Quality Metrics (Consolidated) #

• Trade Receivables:
  • Turnover Ratio: 3.11 (FY24) vs 3.82 (FY23). Calculated as Revenue / Average Receivables.

Laurus Labs Limited: Financial Analysis FY2023-24 #

Revenue Analysis #

• Consolidated Revenue: Decreased by 17% YoY to ₹5,041 crores in FY24 from ₹6,041 crores in FY23, primarily due to the completion of a large Purchase Order (PO) supply in FY23. Excluding the impact of this large PO, core business revenue grew by 9% YoY.
• Segment Performance (YoY Growth excluding FY23 PO impact where applicable):
  • Generics FDF: Grew strongly by 24% YoY to ₹1,414 crores, driven by stabilising ARV business and volume growth in developed markets.
  • CDMO - Synthesis: Core business grew by 24% YoY to ₹922 crores, supported by strong RFP flow and new customer engagements, including a multi-year MSA with a crop science company.
  • Biotechnology: Increased by 28% YoY to ₹160 crores, driven by CDMO services and biocatalysis projects.
  • Generics API: Declined by 2% YoY to ₹2,545 crores. ARV API revenue was steady (+1%) and Oncology API saw strong demand (+27%), but the ‘Other API’ segment declined by 22% due to competitive pricing pressure and lower demand.
• Geographical Performance:
  • Exports contributed 61% of total revenue.
  • Revenue share by region: Europe (27%), North America (17%), Rest of World (ROW) (56%). Developed markets (North America, Europe, Japan) contribution remained steady at 44%.

Cost Structure Analysis #

• Cost of Materials Consumed: Gross margin was 51.7% in FY24, down from 54.1% in FY23 (a decrease of 240 bps), indicating a relative increase in material costs as a percentage of revenue, primarily attributed to product mix changes.
• Employee Benefits Expense: Increased to ₹640 crores in FY24 from ₹581 crores in FY23. As a percentage of revenue, this represents an increase from 9.6% in FY23 to 12.7% in FY24, driven by an increase in employee headcount (+400).
• Other Expenses: Increased to ₹1,191 crores in FY24 from ₹1,093 crores in FY23. As a percentage of revenue, this rose significantly to 23.6% in FY24 from 18.1% in FY23. This increase reflects higher R&D spending (4.8% of sales or ₹241 crores absolute) and upfront costs associated with growth projects and new initiatives (including Cell & Gene Therapy, Animal Health, LSPL Unit 2 expenses).

Margin Analysis #

• Gross Margin: Declined by 240 basis points to 51.7% in FY24 from 54.1% in FY23, impacted by product mix.
• EBITDA Margin: Contracted significantly by 1,060 basis points to 15.8% in FY24 from 26.4% in FY23. This was primarily due to the impact of the large PO completion in FY23, lower asset utilisation, increased R&D spending, and upfront costs for growth projects in FY24.
• Net Profit Margin: Declined sharply by 990 basis points to 3.2% in FY24 from 13.1% in FY23, reflecting the decrease in EBITDA and higher effective tax rate (28.83% vs 28.16%).

Operating Leverage #

• The company experienced negative operating leverage in FY24. Consolidated revenue declined by 17%, while EBITDA plummeted by 50% (from ₹1,594 crores to ₹798 crores).

Non-recurring / Specific Items (FY24) #

• FY24 results were impacted by:
  • Cell and Gene Therapy related R&D spends: ₹15 crores.
  • Share of loss from associate ImmunoACT: ₹5 crores.
  • LSPL Unit 2 (new facility) expenses: ₹24 crores.
  • Gross obligation expenses (related to Laurus Bio NCI Put Option): ₹6 crores.
• Comparability with FY23 is significantly affected by the completion of a large, material PO supply (contributing ₹1,424 crores to CDMO revenue in FY23, nil in FY24).

GAAP vs Non-GAAP Reconciliation #

• The report uses EBITDA as a key performance metric, which is a non-GAAP measure.

EPS Analysis #

• Basic EPS: Decreased by 80% to ₹3.00 in FY24 from ₹14.70 in FY23.
• Diluted EPS: Decreased by 80% to ₹2.99 in FY24 from ₹14.65 in FY23.

Laurus Labs Financial Analysis: FY24 Consolidated #

Cash Flow Analysis #

• Operating Cash Flow (OCF): ₹1,015 crores. Generated primarily from operating profit before working capital changes (₹1,160 crores), offset by working capital movements including increases in inventories (₹160 crores outflow) and receivables (₹83 crores outflow), partially mitigated by increased payables (₹340 crores inflow). Income tax paid was ₹361 crores.
• Investing Cash Flow (ICF): -₹873 crores (Outflow). Dominated by capital expenditure on property, plant, equipment, and intangibles (-₹700 crores). Significant outflows also included investments in associates (-₹80 crores, primarily ImmunoACT) and acquisition of non-controlling interest (-₹72 crores, Laurus Bio).
• Financing Cash Flow (FCF): ₹-437 crores (Outflow). Major uses of cash included repayment of long-term borrowings (-₹300 crores), interest payments (-₹186 crores), dividend payments (-₹86 crores), and lease liability payments (-₹14 crores). Inflows were primarily from proceeds from long-term borrowings (₹767 crores) and short-term borrowings (net increase of ₹70 crores), along with proceeds from ESOP exercise (₹4 crores).

Working Capital Management Efficiency #

• Net Working Capital: Decreased by ₹97 crores to ₹2,457 crores, mainly due to a significant increase in payables (₹340 Cr) offsetting increases in inventories (₹160 Cr) and receivables (₹83 Cr).
• Turnover Ratios:
  • Debtors Turnover Ratio decreased from 4.1 (FY23) to 3.0 (FY24), indicating slower collection of receivables.
  • Inventory Turnover Ratio decreased from 2.6 (FY23) to 1.9 (FY24), suggesting slower movement of inventory.
• Payables: Days Payables Outstanding increased from 70 days (FY23) to 77 days (FY24), indicating the company is taking longer to pay its suppliers.
• Cash Conversion Cycle (CCC): The trends in turnover ratios (slower collections, slower inventory movement, slower payments) suggest a likely elongation of the CCC in FY24 compared to FY23.

Capital Expenditure (Capex) Analysis #

• Total Capex: ₹700 crores (approx. 14% of revenue).
• Segment Allocation Focus: Primarily directed towards expanding CDMO/API service capabilities. Specific investments mentioned include:
  • A dedicated R&D centre (small molecules and high potent) nearing commissioning.
  • Two GMP production plants for Animal Health commenced production, with two more under construction.
  • Phase I construction of a new GMP-grade microbial fermentation facility in Vizag ($40 million investment initiated).
  • Qualification of the Crop Protection unit expected by end-FY25.

Dividend and Share Buyback Trends #

• Dividend Declared: Total interim dividend of ₹0.80 per share (‘0.40 + ‘0.40).
• Dividend Paid: ₹86 crores.
• Dividend Payout Ratio: 19% (Net Profit Basis).
• Trend: This represents a significant reduction from the FY23 dividend of ₹2.00 per share.
• Share Buybacks: No share buybacks were mentioned in the provided text for FY24.

Debt Service Coverage #

• Debt Service Coverage Ratio (DSCR): Decreased significantly to 2.2 in FY24 from 3.8 in FY23.
• Implication: The decline indicates reduced capacity to service debt obligations (interest and principal repayments) from operating earnings (EBITDA), consistent with the reported 50% decline in EBITDA.

Liquidity Position and Cash Conversion Cycle #

• Current Ratio: 1.2 (FY24) vs 1.3 (FY23), indicating a slight tightening of short-term liquidity.
• Cash Position: Cash and cash equivalents stood at ₹139 crores, with other bank balances (including margin money deposits) at ₹3 crores.
• Debt Levels: Total debt increased by ₹535 crores to ₹2,507 crores. Debt-Equity ratio increased to 0.61 (FY24) from 0.49 (FY23), showing increased leverage.
• Cash Conversion Cycle: The CCC likely elongated in FY24, suggesting that more cash is tied up in the operating cycle.

Free Cash Flow (FCF) Yield Trends #

• Free Cash Flow (OCF - Capex): ₹1,015 crores (OCF) - ₹700 crores (Capex) = ₹315 crores for FY24.
• FCF Yield: Cannot be calculated as the market capitalization of Laurus Labs is not provided. Calculation requires FCF divided by Market Capitalization.

Operational Metrics #

Key Performance Indicators #

Business Segments: FY24 Performance Analysis #

Revenue and Profitability Analysis (FY24 Consolidated) #

• Revenue: Operations declined by 17% YoY to ₹5,041 crores. Excluding the PO impact, core business revenue grew by 9%.
• Segment Performance: Formulations (+24%), CDMO-Synthesis (+24% core growth), and Biotechnology (+28%). Generic API revenue declined by 2%.
• Gross Margin: Remained resilient at 51.7%.
• EBITDA: Decreased by 50% YoY to ₹798 crores. EBITDA margin contracted to 15.8%.
• Profit After Tax (PAT): Declined by 80% YoY to ₹161 crores. PAT margin stood at 3.2%.
• Dividend: Payout Ratio maintained at 19%, with a total dividend of ₹0.80 per share declared for FY24.

Market Share and Competitive Position #

• API Leadership: Laurus Labs maintains its position as a global leader in APIs for Antiretrovirals (ARV), Oncology, and Hepatitis C.
• CDMO Growth: Strengthening position as a preferred Contract Development and Manufacturing (CDMO) partner, serving 6 out of the top 10 global innovator pharmaceutical companies.
• Competitive Differentiation: Includes large-scale manufacturing facilities, strong R&D focus, cost leadership, strategic partnerships, and an experienced management team.

Key Products/Services Performance #

• Generics FDF: Revenue grew 24% YoY to ₹1,414 crores.
• Generics API: Revenue declined 2% YoY to ₹2,545 crores.
• CDMO Synthesis: Core business revenue grew 24% YoY to ₹922 crores.
• Biotechnology (Laurus Bio): Revenue increased 28% YoY to ₹160 crores.

Geographic Distribution and Market Penetration #

• Export Dependence: Exports contributed 61% of revenue in FY24. Products are distributed in over 80 countries.
• Revenue by Region: Europe (27%) and North America (17%) accounted for 44% of revenue. Rest of World (ROW) contributed 56%.
• Market Expansion: Strategic focus includes expanding customer base across North America, Europe, and Low- and Middle-Income Countries (LMICs).

Segment-wise Capex and Capacity Expansion #

• Total Capex: FY24 capex stood at ₹700 crores (14% of revenue).
• CDMO Focus: Investment includes a new dedicated R&D center, operational Animal Health DS facility, and initial construction for the Crop Protection unit.
• Biotechnology Expansion: A $40 million Phase I construction commenced for a new GMP-grade microbial fermentation facility in Vizag.
• Generics Capacity: API capacity increased by 30% over the last 24 months to 7,750+ KL reactor volume. FDF capacity doubled to 10 billion units annually.

Operational Efficiency Metrics #

• Manufacturing Excellence: Operates 12 manufacturing facilities approved by global regulatory bodies.
• Capacity Utilization: A key focus for FY25 is improving asset utilization.
• Cost Management: Active efforts to increase efficiency and mitigate inflationary/pricing pressures.
• Quality & Compliance: Successfully underwent over 130 quality audits in FY24 without critical findings. All manufacturing sites are cGMP compliant and hold ISO certifications.
• Supply Chain: Focus on responsible sourcing and diversifying supplier base.

Growth Initiatives and Challenges #

• Strategic Initiatives:
  • CDMO Expansion: Multi-year contract with a leading Crop Science company; dedicated Animal Health facilities operational.
  • Krka JV: Partnership with up to €50M phased investment for a new FDF facility in Hyderabad.
  • Cell & Gene Therapy: Launched NexCAR19; constructing a second CAR-T facility and a GLP/GMP viral vector/gene therapy facility with IIT Kanpur. Increased stake in ImmunoACT to ~34%.
  • R&D: Investment at 4.8% of revenue, focusing on complex chemistry.
• Challenges & Risks:
  • API Pricing Pressure: Significant challenge noted in non-ARV/non-oncology API segment due to competition.
  • ARV Market Dynamics: Excess channel inventory cited as a threat, potentially impacting pricing.
  • Regulatory Delays: Potential delays in approvals identified as a risk impacting new product launches.
  • Competition: Intense competition in both domestic and international markets remains a key risk.
  • Capacity Optimization: Need to effectively ramp up and utilize recently added capacities to improve margins.
• Outlook FY25: Focus on unlocking sustainable/profitable growth, improving operating margins and asset utilization.

Laurus Labs Limited: FY24 Financial Analysis #

Overall Financial Performance (Consolidated) #

• Revenue: Reported Revenue from Operations stood at ₹5,041 crores, a 17% decrease year-on-year (YoY) from ₹6,041 crores in FY23. This decline is primarily attributed to the completion of a large Purchase Order (PO) supply to a major pharma client in FY23 (worth ₹1,424 crores). Excluding this PO effect, core business revenue grew by 9%.
• Profitability:
  • Gross Margin remained relatively resilient at 51.7%, compared to 54.1% in FY23.
  • EBITDA significantly decreased by 50% to ₹798 crores (vs. ₹1,594 crores in FY23). EBITDA margin contracted sharply to 15.8% from 26.4%, impacted by lower asset utilization, upfront costs associated with growth projects (including Cell & Gene Therapy, Animal Health), higher R&D spending, and the base effect of the large FY23 PO.
  • Profit After Tax (PAT) declined by 80% to ₹161 crores (vs. ₹790 crores in FY23). PAT margin was 3.2% compared to 13.1% in FY23.
  • Earnings Per Share (EPS) (Diluted) decreased to ₹3.0 from ₹14.6 in FY23.
• Dividend: The company declared a total dividend of ₹0.80 per share (40% on face value ₹2), resulting in a payout ratio of 19% (total payout ₹86 crores).

Segment-wise Performance Analysis (Consolidated) #

• Generics - FDF (Formulation Finished Dosage): Revenue grew strongly by 24% YoY to ₹1,414 crores. Growth was driven by stabilizing ARV business, volume expansion in developed markets, new US product launches, and increased CMO activity. The JV with KRKA is expected to enhance this segment’s portfolio and market reach.
• Generics - API (Active Pharmaceutical Ingredients): Revenue was ₹2,545 crores, a slight decline of 2% YoY.
  • ARV API revenue remained steady (+1%).
  • Oncology API saw strong demand, growing 27%.
  • Non-ARV/Non-Oncology API revenues declined by 22% due to lower demand and competitive pricing pressures, despite strong CMO contract deliveries. Focus remains on leveraging large-scale capacity for dual sourcing opportunities.
• CDMO - Synthesis: Revenue stood at ₹922 crores. While reported revenue declined due to the non-recurrence of the large FY23 PO, the core CDMO business grew by 24%. This was supported by increased RFPs from large pharma/biotech, growth in the commercial pipeline (70+ active projects, 10 commercial), and expansion into Animal Health DS. A multi-year MSA with a leading crop protection company provides future visibility.
• Biotechnology (Laurus Bio): Revenue grew by 28% YoY to ₹160 crores, driven by CDMO services and leveraging biocatalysis expertise. Demand for CDMO services is strong, and capacity expansion (including a $40M investment in microbial fermentation) is underway. The company increased its stake in Laurus Bio to 87.58%.

Financial Position and Liquidity (Consolidated) #

• Assets: Total assets increased to ₹8,155 crores from ₹7,820 crores. Net Fixed Assets (including CWIP) rose to ₹4,048 crores (+₹348 crores) due to significant investments, primarily in the CDMO business (new R&D centre, manufacturing blocks).
• Working Capital: Net working capital decreased marginally to ₹2,457 crores (-₹97 crores). While Inventories increased to ₹1,845 crores (+₹160 crores) and Receivables grew to ₹1,663 crores (+₹83 crores), this was more than offset by a significant increase in Payables to ₹1,051 crores (+₹340 crores).
• Debt: Total Debt (current and non-current) increased by ₹535 crores to ₹2,507 crores. This increase was primarily driven by long-term debt to fund key growth projects in CDMO and infrastructure. The Debt-Equity ratio increased to 0.61 from 0.49.
• Cash Flow: Cash generated from operations was strong at ₹976 crores (vs. ₹1,050 crores in FY23). Net cash used in investing activities was significant at ₹817 crores (vs. ₹1,374 crores) mainly due to capex. Net cash from financing activities was ₹(34) crores (vs. ₹439 crores), reflecting higher debt proceeds offset by repayments

Laurus Labs Limited: Financial Analysis Report FY2023-24 #

Executive Summary #

Laurus Labs reported a mixed financial performance in FY24. Core business revenue (excluding a large one-off PO from FY23) grew 9% YoY to ₹5,041 crores, reported revenue declined 17%. Significant margin pressure was evident, with EBITDA falling 50% to ₹798 crores (15.8% margin vs 26.4% in FY23) and PAT declining 80% to ₹161 crores. This was attributed to lower asset utilization, upfront costs associated with growth projects, and pricing pressures, particularly in the non-ARV/non-Onco API segment. FDF and Bio segments showed strong growth (24% and 28% respectively), while CDMO-Synthesis core business also grew 24%. The company continued significant capital expenditure (₹700 crores) focused on expanding CDMO/API capabilities, including new R&D, Animal Health, and Fermentation facilities. Strategic initiatives like the Krka JV and increased investment in ImmunoACT (CAR-T therapy) signal diversification efforts. The outlook for FY25 focuses on leveraging new capacities, improving margins through better asset utilization and cost control, and capitalizing on late-phase NCE opportunities, while acknowledging continued API pricing headwinds.

Financial Performance Analysis (FY24) #

Revenue #

Total revenue from operations stood at ₹5,041 crores, a 17% decline from ₹6,041 crores in FY23. This decline was primarily due to the completion of a large Purchase Order (PO) supply in FY23 (₹1,424 crores). Excluding this PO, core business revenue grew by 9%, driven by FDF (+24%), Bio (+28%), and CDMO-Synthesis (+24%, excluding PO impact). The API segment saw a 2% decline overall.

Profitability #

• Gross Margin remained relatively resilient at 51.7%, down 240 bps from 54.1% in FY23, impacted by product mix.
• EBITDA declined sharply by 50% to ₹798 crores from ₹1,594 crores in FY23. EBITDA margin contracted significantly to 15.8% from 26.4%, attributed to lower asset utilisation, increased R&D spending (4.8% of sales), and upfront costs related to growth projects and new initiatives (CGT, Animal Health, LSPL Unit 2).
• Profit After Tax (PAT) decreased by 80% to ₹161 crores from ₹790 crores in FY23. PAT margin was 3.2% compared to 13.1% in FY23.

Balance Sheet Analysis #

• Net Fixed Assets (incl. CWIP) increased by ₹348 crores to ₹4,048 crores, driven by investments in CDMO R&D and manufacturing blocks.
• Net Working Capital decreased by ₹97 crores to ₹2,457 crores, as higher payables offset increases in inventories and receivables.