Shares of Laurus Labs Ltd slumped over 7 percent in early trade on Tuesday to hit a new 52-week low of ₹415.25 due to margin concerns.
At 11:41 am, the stock was trading at ₹417.90, down 7.24 percent, on the BSE.
The stock had hit its previous low of ₹433.20 on January 28, 2022, while it hit its 52-week high of ₹626.3 on April 19, 2022. At the current levels, the stock is down over 30 percent from its 52-week high.
On Monday, brokerage house Kotak Institutional Equities downgraded the stock to 'sell' and slashed its target price by nearly 24 percent to ₹350 on the back of “severe pricing pressure and lower volumes in its ARV formulations portfolio for five quarters now”.
“We believe Laurus’ troubles on ARV pricing and looming cessation of Paxlovid sales are being underappreciated. Ex-Paxlovid, it reported just a around 19 per cent EBITDA margin in 1HFY23. Even as volumes pick up, Laurus’ ARV realization will stay under pressure, as it bids for winner-takes-all tenders and lower long-term tender prices. As Paxlovid sales recede, the true extent of the margin hit will unravel,” it said.
According to the brokerage, once Paxlovid contribution recedes in 2HFY23, the impact of lower ARV pricing would start reflecting in weaker overall margins, despite some respite from higher capacity utilisation, lower raw material prices and backward integration initiatives.
It has slashed the FY2023-25E EPS by 12-28 percent.
On the technical front, analysts believe the stock will follow a negative trend. They said that prices have broken their important support with high volumes.
"The stock has broken below key support of 440 and we are witnessing sharp sell off with huge volumes, we expect further weakness towards 404 and 435 - 440 is likely to act as resistance," said Rajesh Bhosale, equity technical and derivative analyst, Angel One.
The stock's weekly average delivery volume is 55.79 percent.
According to Mintgenie poll, 11 analysts recommend 'hold' rating for the stock.