Laurus Labs

Laurus Labs reported robust financial results for Q3 FY26, with revenues reaching ₹1,778 crores. The nine-month period (9M FY26) saw total income from operations cross ₹5,001 crores, marking a 30% growth. Gross margins expanded to 60.9% in Q3, contributing to a 9M gross margin of 60.1%. EBITDA margins also saw healthy expansion, reaching 27% in Q3, with 9M EBITDA at ₹1,303 crores (26.1% margin). Profit after tax for 9M FY26 surged by 388% to ₹610 crores, and ROCE improved to 18.5%.

The CDMO segment continued its strong trajectory, achieving over 50% growth in 9M FY26. Q3 sales for small molecules were ₹408 crores, while the Bio division contributed ₹43 crores. The company is investing significantly in CDMO capabilities, including peptide development and manufacturing infrastructure, and has allocated $25 million for an ADC GMP facility. Construction for a commercial-scale fermentation facility in Vizag (Phase-1, 400 kiloliters) is on track for operationalization by the end of 2026. Management expects healthy CDMO growth in FY27, with a majority of revenues from commercial supplies, though quarter-to-quarter lumpiness is anticipated.

The generics division demonstrated strong performance, with Q3 revenues growing 37% to ₹1,327 crores, and 9M revenues up 26% to ₹3,510 crores. This growth was primarily fueled by higher ARV volumes and successful offtake of recently launched products in developed markets. The ARV business, including both API and formulations, is stable, with 9M formulation revenues at ₹865 crores and API revenues at ₹1,259 crores. Total ARV revenues for Q3 were ₹744 crores. Management believes the current ARV run rate of ₹2,600 +/- 200 crores is sustainable due to expanded API capacities and increased market share.

Laurus Labs maintained its commitment to R&D, with a 9M spend of 4.1% of sales, an 8% increase year-on-year. This investment supports portfolio complexity, scale, and new technology platforms, including Cell and Gene lab space. On the quality front, the company successfully passed over 110 quality audits by multiple regulatory agencies and customers without any critical observations. The company also reported an impressive 10 percentage point increase in its 2025 ESG score, achieving 81 out of 100 points.

The company's capital allocation strategy prioritizes high-value business segments. Total CAPEX for FY26 is projected to be around ₹1,000 crores, with a similar amount expected for FY27. Investments include the Krka Pharma joint venture for European formulations, with Phase-1 completion by mid-2027 and revenues expected from the next financial year. While new modalities like ADC and gene therapy are under development, meaningful revenues from these are not expected for the next 2-2.5 years. The company aims to improve its ROCE from the current 18.5% and targets an asset turnover of 1.1 over time^⏳.