Buy Laurus Labs; target of Rs 535: HDFC Securities

HDFC Securities’ research report on Laurus Labs

Laurus has received Global Fund orders for the HIV drug, TLD, following a tentative approval from the US FDA last month. This is a big positive for the company and reinstates investor confidence in the business, with the formulations segment finally beginning to fire. With volume commitment for TLD from the Global Fund for the next 3.5 years, as well as ~US$ 12-15mn orders in hand from an EU partner and ongoing supplies of Metformin and HCQ to the US, we have high visibility on ~US$ 40mn formulations revenue in FY20E. This significant ramp up in formulations will drive oplev and margin expansion.

Outlook

Overall, we estimate 12/42/88% rev/EBITDA/earnings CAGR over FY19-21E. The stock is currently trading at attractive valuations of 22.6/13.5x FY20/21E EPS. We maintain BUY with a TP of Rs 535 (18x FY21E EPS). Refer our Jan-19 IC note for further details.

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First Published on Mar 28, 2019 03:23 pm

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