Laurus Labs hits all-time high

The shares of Laurus Labs Ltd touched its all-time high on Friday. It has registered staggering gains of 341 per cent in the past one-year period. Interestingly, it took only 5 months for the stock price to reach this point.

The API and generic dosage manufacturer saw its fortunes turn after the pandemic that witnessed a sharp jump in its products. After the listing was done in December 2016, the stock price had recorded returns of just 3 per cent CAGR till June 2020 (adjusted for corporate actions). Nevertheless, Coronavirus increased the demand for antiviral and generic dosage formulations, which resulted in high demand.

Most importantly, the API segment for anti-retroviral (ARV), oncology, cardiovascular, anti-diabetics, anti-asthma, and gastroenterology saw strong demand during the COVID-19 crisis. It got further growth opportunities in formulation manufacturing and service to America and Europe, where the COVID-19 spread reached a peak for the most part of 2020. Besides, its generic formulations business recorded significant growth from Rs 106 crore to Rs 352 crore on a YoY basis for the first quarter. For the second quarter, the demand for this segment again saw a jump from Rs 160 crore to Rs 452 crore.

In recent management commentary, the company added that they plan to spend as much as Rs 1,500 crore over the next couple of months. The aim is to expand its production capacity. As the company still expects good visibility of orders going forward, large capital expenditure would help the company in meeting the additional demand. Hence, the company would target Capex that will double its capacity for formulations business while the API capacity would see a rise in capacity up to 50 per cent.

In the afternoon session, the stock quoted at Rs 322 per share on BSE.