Laurus Labs Ltd, a prominent player in the pharmaceutical industry, has reported a 46.5% year-on-year decline in net profit for the second quarter of fiscal year 2024-25. The company's net profit stood at ₹19.8 crore, compared to ₹37 crore in the same quarter of the previous fiscal year. This performance fell short of the CNBC-TV18 poll, which had anticipated a profit of ₹46 crore for the quarter under review.

The company's revenue from operations remained flat at ₹1,224 crore, again missing market expectations, which projected revenue of ₹1,287 crore. This stagnation indicates potential challenges in the market despite Laurus Labs' robust product offerings and strategic initiatives.

At the operating level, Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) dipped by 5.2% to ₹180 crore in Q2 FY25, down from ₹189 crore in the corresponding period of the previous fiscal year. Analysts had projected an EBITDA of ₹213 crore, highlighting a significant deviation from expectations. The EBITDA margin was reported at 14.7%, a decline from 15.4% in the same period last year, falling short of the forecasted 16.6% margin.

In light of the current financial performance, the board of directors of Laurus Labs has approved an interim dividend of ₹0.40 (20%) per equity share for the financial year 2024-25. This move demonstrates the company’s commitment to providing returns to its shareholders, even amidst challenging market conditions.

Laurus Labs reported H1 FY25 revenues of ₹2,419 crore, reflecting a modest 1% growth. The company is optimistic about achieving its full-year growth outlook, supported by the timely delivery of projects within its contract development and manufacturing organisation (CDMO) business.

The EBITDA for the first half stood at ₹353 crore, yielding a margin of 14.6%, which was impacted by lower asset utilization and upfront costs related to growth projects. Despite these challenges, gross margins remained robust at 55.1%, marking a 3.5 percentage point improvement compared to the previous year.

Laurus Labs is currently witnessing strong demand for its integrated CMO/CDMO service offerings and complex APIs, supported by a healthy pipeline of projects. The company's capital expenditure (CAPEX) initiatives are progressing as planned, aiming to bolster long-term growth.

The FY25 outlook remains positive, with expectations of stronger performance in the second half of the year driven by facility ramp-ups, the delivery of late-phase new chemical entity (NCE) projects, and improved EBITDA margins. The CDMO-Synthesis business generated revenues of ₹513 crore during H1 FY25, reflecting an 8% increase. For Q2 FY25, revenues stood at ₹299 crore, representing a 33% year-on-year increase due to advancing clinical projects.

Additionally, Laurus Labs has opened a 200,000-square-foot small molecules R&D facility at IKP Knowledge Park, enhancing its capabilities in areas such as flow chemistry, bio-catalysis, and high-potency chemistry. This expansion is geared towards meeting the demands of global partners and early-phase projects.

In the API segment, Laurus Labs reported flat revenues of ₹1,221 crore for H1 FY25. The company is actively working on strategic initiatives to drive API growth in the mid to long term, aiming to expand contract manufacturing (CMO) engagements while improving efficiency. To date, Laurus has filed 352 patents, with 235 granted, and submitted 87 drug master files (DMFs) as of September 2024.

The Finished Dosage Form (FDF) business reported revenues of ₹602 crore for H1 FY25, a 2% decline due to lower volume in the antiretroviral (ARV) segment, although developed markets showed good growth. For Q2 FY25, revenues for this segment stood at ₹328 crore, marking a 1% year-on-year decline. Despite ongoing industry supply challenges, Laurus Labs anticipates a ramp-up in the FDF segment, supported by recent product approvals in the US.

The KRKA joint venture (JV) is progressing well to meet strategic capacity needs, with technology transfers initiated under the CMO model, and expanded formulation lines expected to come online in the next 12-15 months. During H1 FY25, Laurus Labs filed two product dossiers in developed markets, receiving a total of four approvals, including tentative approvals.

In the Bio business, Laurus Labs reported revenues of ₹83 crore in H1 FY25, a 7% decline primarily due to the impact of bunched-up shipments last year and the discontinuation of low-margin non-core nutrition products. However, the underlying performance in this segment remains healthy, with Q2 FY25 revenues at ₹40 crore, reflecting a 3% year-on-year increase.

As a significant player in the pharmaceutical industry, Laurus Labs' performance continues to be closely watched. The company ended the trading session with shares priced at ₹450.35, up by ₹1.00, or 0.22% on the BSE.

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