Laurus Labs shares plunge 10% as profit booking kicks in after positive Q3 earnings- Grow Mudra

Laurus Labs shares plunge 10% as profit booking kicks in after positive Q3 earnings

27 Jan , 2025 By : Debdeep Gupta

Shares of Laurus Labs tanked 10 percent on January 27 as investors rushed to book profits off the stock, thereby snapping its two-day winning run. The stock gained nearly 6 percent in the past two sessions, buoyed by the company's better-than-expected Q3 results.

At 09.54 am, shares of Laurus Labs were trading at Rs 544.90 on the NSE.

Net profit for the drugmaker surged manifolds on year to Rs 92 crore, up from Rs 23 crore that it clocked in the same quarter last year. The net profit was also aided by a spike in other income to Rs 9.4 crore from Rs 2.4 crore in the year-ago period.

Revenue also grew by 18.5 percent on a year-on-year in the quarter gone by to Rs 1,415 crore, up from Rs 1,194 crore last fiscal. Even on a sequential basis, the topline rose 16 percent. However, the strongest upside trigger for the Street was an expansion in the company's EBITDA margin.

The drugmaker's EBITDA margin swelled up a massive 500 basis points on year to 20.2 percent in Q3. This marked the first time since the Q4 of FY23 that the company's EBITDA margin came above the 20 percent mark.

Brokerage firm Goldman Sachs attributed Laurus Labs' margin improvement to better gross margins and operating leverage. Despite that, the brokerage retained its 'sell' call on the stock with a price target of Rs 475, opting to wait for a sustained improvement in the company's financials.

Looking ahead, Laurus expects EBITDA margins to improve further on better asset utilization and productivity gains while continuing with new initiatives. On that account, the management has reiterated its 20 percent EBITDA margin guidance for FY25.

Meanwhile, even though the company did not provide quantitative guidance for topline growth for FY25, the management did mention that they have laid strong foundations for medium-term growth.

Motilal Oswal Financial Services also based on the management's optimism, stating that green shoots of recovery were visible for the drugmaker. "Q3 to witness further improvement in financial performance for Laurus," the brokerage stated. MOFSL has a 'buy' call on the stock with a price target of Rs 720.