Shares of Laurus Labs fell 3.35 percent to close at ₹330.40 on BSE on January 31, a day after the pharmaceutical firm reported its December quarter (Q3FY23) earnings.
The stock pared losses after falling over 5 percent to its fresh 52-week low of ₹324.25 in the intraday trade on BSE.
In a BSE filing on January 30, the company reported a 15 percent year-on-year (YoY) increase in its December quarter profit after tax (PAT) at ₹203 crore. Revenue rose 50 percent YoY to ₹1,545 crore in the quarter under review.
EBITDA for the quarter came in at ₹404 crore, up 39 percent YoY while EBITDA margin for Q3FY23 stood at 26.1 percent.
“Our Q3 and 9-month results reflect sustained business momentum across our key growth drivers, which is visible in our commercial execution within CDMO, and Non-ARVs generic portfolio. The growth is also supported by an anticipated recovery in the ARV FDF segment, which is likely to continue despite pricing challenges," said Satyanarayana Chava, Founder and Chief Executive Officer of Laurus Labs.
"We believe our capital allocation framework including commitment towards diversification and strengthening non-ARV portfolio, building niche capabilities, and improving operational efficiency will continue to be in force in creating long-term value,” said V V Ravi Kumar, Executive Director & Chief Financial Officer, Laurus Labs.
The stock ended flat on January 30.
However, the next session witnessed heightened selling in the stock after some brokerages tweaked their estimates.
Motilal Oswal Financial Services has maintained a ‘buy’ call on the stock with a target price of ₹440. Still, it cut its earnings estimate by 4 percent for FY23, 11 percent for FY24 and 6.7 percent for FY25, considering the moderation of CDMO (Contract Development and Manufacturing Organization) business for FY24 on a high base of FY23, gradual ramp-up in Non-ARV FDF, and operational cost related to expanded facilities.
"We expect 18 percent earnings CAGR over FY23-25. Also, the valuation is attractive at 17 times/14 times FY24E/FY25E earnings, respectively," said Motilal Oswal.
Some technical analysts believe this stock can give decent returns in the short term.
Jigar S. Patel, Senior Manager - Equity Research, Anand Rathi Share and Stock Brokers pointed out that one needs to pay attention to the stock's last two months' fall from ₹440 level.
Patel highlighted that selling volume is not rising with a fall in price which is an anomaly according to volume spread analysis. In another word, volume is not in sync with the price.
Patel also added that on a weekly scale, a bullish AB=CD pattern has formed near its historical support zone of ₹320-330 while the weekly MACD histogram is losing downward momentum, hinting towards some bounce in the coming few weeks.
"One can buy Laurus Labs only in the range of ₹320-330 with a stop loss of ₹299 and a target price of ₹380," said Patel.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.