Laurus Labs Ltd Q4 FY26 Earnings Analysis

- API and formulation segments expected to grow significantly in FY’28, with some growth in FY’27 due to new capacities and validations. (Page 21) - ARV segment revenues expected to remain in the range of Rs. 2,500 to 3,000 crores. (Page 21) - Generic API business growth viewed as very sustainable; FDF business growth also expected to be sustainable due to new capacities and volume gains. (Pages 15, 21) - CDMO business reported 50% growth in 9 months FY’26; expects continued healthy growth in Q4 FY’26 and qualitative growth in FY’27 driven mainly by commercial supplies. (Pages 12, 14) - Non-ARV formulations expected to sustain growth supported by additional capacities for CMO partners in Europe and new launches in North America. (Page 19) - Bio division revenues likely to stagnate until new capacities at Vizag become operational by end of calendar year 2026; ROCE expected to improve gradually. (Page 7) - Overall, healthy operational growth anticipated for the financial year and beyond with capacity expansions in progress. (Page 4)

- FY’27 and FY’28 expected growth: - Significant growth anticipated in API and formulations, especially FY’28 due to new capacities and generic API validation. - ARV segment expected stable in the Rs. 2,500 – 3,000 crore range. - Gross margins: - Targeting sustained gross margin of around 60% in coming quarters and FY’27. - CDMO business: - Delivered over 50% growth in 9 months FY’26; expected to sustain growth with new commercial molecules. - Growth is lumpy quarter-on-quarter but strong on a yearly basis. - Profitability: - EBITDA margin around 26%-27% anticipated. - Profit after tax showed strong 388% growth in 9 months FY’26. - Asset turnover aimed to improve from current 0.9 to 1.1 in medium term. - Operating cash flow conversion expected to improve sustainably going forward, aided by changing business mix and customer advances. Overall, Laurus Labs expects strong and sustainable top-line growth, margin stability, and improved profitability over the next 2-3 years.

- New greenfield CAPEX of 500 acres in Atchutapuram: land allotment expected in Q4 FY'26; CAPEX to start in second half of FY'27; qualification and validation expected two years later (around FY'29). - Joint venture with Krka Pharma: Phase-1 includes 3 billion solid oral tablet capacity and 100 million potent tablet capacity; Phase-1 expected completion by mid-2027; Phase-2 to add 5 billion solid oral tablet capacity. - Peptide CDMO commercial manufacturing facility: qualification expected during calendar year 2026; integrated capacity being created including amino acids and peptide processing. - ADC (antibody drug conjugates) GMP facility: $25 million allocated for construction; no meaningful revenue expected in next two years; investments ongoing in both CAPEX and OPEX. - Overall CAPEX: over Rs. 1000 crores estimated for FY'26 and expected similarly for FY'27. - Strategy includes investing ahead of time to meet innovator demand without losing business due to capacity constraints.

- The company may slightly increase debt if needed, but aims to maintain a stable debt-to-EBITDA ratio (Page 7). - Current net debt stood at Rs. 2,092 crore, similar to previous quarter, with debt-to-EBITDA around 1.2x (Page 6). - CAPEX in FY'26 is expected to be over Rs. 1,000 crores, indicating ongoing capital investment (Page 7). - No explicit mention of new equity fundraising in the provided transcript. - Management continues to prioritize investments in high-value business segments for growth and shareholder returns (Page 6). - No direct confirmation of immediate fundraising through debt or equity, but slight debt increase is possible if required.

- The transcript does not provide explicit details on the current or expected order book or pending orders for Laurus Labs Limited. - However, it's mentioned that the CDMO business has strong recurring business from existing long-term customer relationships and a healthy pipeline with a well-balanced mix of big pharma, mid-, and small-sized biotechs. - The company supplies multiple commercial molecules and is investing in capacity expansion, including peptides and advanced technologies. - For human health CDMO, several programs with partners are ongoing with commercial supplies. - Crop science CDMO products have been commercialized with meaningful supply expected in 1-2 years. - Discussions with large pharma on late-stage molecules continue but no specific order details were disclosed due to confidentiality. - The generic division shows growing volumes supported by recently launched products in developed markets. No specific order book value or exact pending order details were disclosed.