Laurus Labs — Q4 FY26 earnings call

Call held 30 Apr 2026

Management summary

Laurus Labs reported strong Q4 and FY26 results, driven by robust growth in its CDMO business and healthy performance in Affordable Medicines. The company achieved significant margin expansion and improved capital efficiency, while strategically investing in capacity expansion and new modalities. Management expressed confidence in future growth and margin sustainability, despite acknowledging potential geopolitical and supply chain challenges.

Highlights

  • Revenue for FY26 was ₹6,813 crores, up 23% YoY, driven by CDMO and Affordable Medicine portfolios.

  • EBITDA margin for FY26 expanded by 6.7 percentage points to 26.8%, with Q4 FY26 EBITDA margin reaching 28.9% due to strong operating leverage.

  • CDMO business delivered robust operational execution, with small molecule CDMO growing 38% to ₹1,896 crores for FY26.

  • ROCE improved significantly from 9.7% in the previous year to 17.7%.

  • Net debt to EBITDA ratio improved to 1.25x from 2.3x last year, reflecting strong internal cash flows.

Concerns

  • Increasing geopolitical disruptions may impact raw material availability and logistics, potentially creating near-term pressure on OTIF performance across the industry.

  • Lumpiness in CDMO earnings quarter-on-quarter is possible, though year-on-year growth is expected to be good.

  • Solvent price increase had some impact in Q4 FY26, but management expects to weather the challenge.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹1,812 Cr
    YoY +5%
  • EBITDA
    ₹523 Cr
  • EBITDA Margin
    28.9%
  • Gross Margin
    61.4%
  • PAT
    ₹279 Cr

FY26

  • Revenue
    ₹6,813 Cr
    YoY +23%
  • EBITDA
    ₹1,826 Cr
  • EBITDA Margin
    26.8%
    YoY +6.7%
  • PAT
    ₹889 Cr
    YoY +148%
  • ROCE
    17.7%
  • R&D Spend to Sales
    4.1%

What they filed

Q1 FY27: revenue up 22.6%, net profit up 83.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,185 1,265 1,650 1,433 1,567 +32%1,509 +19%1,580 −4%1,757 +23%
EBITDA182 206 395 327 390 +114%346 +68%375 −5%499 +53%
Net profit42 57 252 158 216 +414%175 +207%192 −24%290 +84%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • CDMO (Overall)
    ₹2,080 Cr Revenue (FY26)
  • CDMO (Small Molecule)
    ₹1,896 Cr Revenue (FY26)₹524 Cr Sales (Q4 FY26)
  • Laurus Bio
    ₹65 Cr Sales (Q4 FY26)15% Sales Growth (FY26)
  • Affordable Medicines (Generics)
    ₹1,223 Cr Revenue (Q4 FY26)₹4,733 Cr Revenue (FY26)
  • ARV
    ₹2,800 Cr Revenue (FY26)41% Contribution to Total Revenue (FY26)

Capital allocation

high confidence
  • Capex ₹335 Cr this quarter · ₹1,070 Cr (FY26) planned
    • Expansion of CDMO and CMO capabilities
    • Common infrastructure like ETP and maintenance
    • Mid- and large-scale manufacturing (90% of future project spend)
    • Greenfield manufacturing project, Unit 7 (first production by March '27, four additional units by FY28 with >2,000 cubic meters reactor volume)
    • Commercial scale peptide manufacturing block (validation by Q2 FY27)
    • Animal Health capacities at Unit 10 (addition to LSPL Unit 2)
    • Laurus Bio fermentation greenfield site, Phase 1 (by end of 2026)
    • Formulation facility under KRKA joint venture, Phase 1 (by mid-2027)
    More than 75% invested into expansion of CDMO and CMO capabilities, rest in common infrastructure like ETP and maintenance. Our net debt stood at INR2,285 crores and debt by EBITDA is 1.25 versus 2.3 last year on the back of strong internal cash flows. Of course, though there is a debt increase in the quarter 4, still we are at a 1.25 debt EBITDA level. On the capital allocation front, our strategy remains unchanged, and we will continue to prioritize investment into high-value business segments to drive near and long-term growth and returns for our shareholders. You can refer our IR presentation for more details. ... Currently, we are managing several capex growth projects, which will be executed in the next 2 years. 90% of project spend is towards mid- and large-scale manufacturing. I will just mark a few areas where we are investing. We are creating a large manufacturing greenfield project, Unit 7, and the first production will be ready for commercial validation by March '27 and four additional manufacturing during the next financial year FY '28 with a combined reactor volume of over 2,000 cubic meters. Second, commercial scale peptide manufacturing block will be ready for commercial scale validation during Q2 of this financial year FY '27. Animal Health, there is some capacities at Unit 10, which is addition to LSPL Unit 2. Fourth, a fermentation greenfield site for our Laurus Bio, Phase 1 will start by end of 2026. Lastly, we are also spending on formulation facility under our KRKA joint venture in Hyderabad, and we expect Phase 1 will be completed by mid-2027.
  • Debt Net ₹2,285 Cr · 1.3× EBITDA
    Our net debt stood at INR2,285 crores and debt by EBITDA is 1.25 versus 2.3 last year on the back of strong internal cash flows. Of course, though there is a debt increase in the quarter 4, still we are at a 1.25 debt EBITDA level.

Guidance & targets

R&D Spend

  • R&D spend as % of sales R&D Spend · next year · High confidence similar percentage to 4.1%
    Our overall R&D spending to sales for FY '26 was at 4.1%, increased by 10% year-on-year, including our expenditure on cell and gene therapy space. The spend is in line, and we expect a similar percentage going into the next year as well.

    — Satyanarayana Chava

EBITDA Margin

  • EBITDA Margin EBITDA Margin · FY '27 · High confidence maintain or improve
    We are very confident on maintaining or improving this EBITDA margin in FY '27. We are comfortable in maintaining that. Yes.

    — Satyanarayana Chava

Tax Rate

  • Effective tax rate Tax Rate · year · High confidence 25% to 26%
    Effective tax rate will be around 25% to 26%. The standalone is definitely 25%. Then capex guidance is around INR3,000 crores in 2 years' time.

    — V. V. Ravi Kumar

Capex

  • Capex Capex · next 2 years · High confidence ₹3,000 crores

    Previously ₹1,000 crores → ₹3,000 crores

    Although we said INR1,000 crores earlier, now depending on the prospects what we need capacity and what projects in front of us, we are increasing our capex spend there. And we expect to spend around INR3,000 crores in the next 2 years.

    — Satyanarayana Chava

Debt

  • Net Debt to EBITDA Debt · current year FY '27 · Medium confidence maintain similar levels or softening
    Gross debt, It may slightly go up in the current year FY '27, but the debt by EBITDA may be maintain at the similar levels or may be softening from the current level.

    — V. V. Ravi Kumar

CDMO Contribution

  • CDMO revenues as % of overall sales CDMO Contribution · by FY30 · High confidence 50%
    By FY30, we expect CDMO revenues in general will be 50% of our overall sales. And the ARV percentage will come down significantly.

    — Satyanarayana Chava

ARV Contribution

  • ARV percentage contribution to total sales ARV Contribution · future · High confidence come down significantly
    While the ARV sales remain constant, but percentage contribution will come down significantly.

    — Satyanarayana Chava

What to watch in Q1 FY27

Unit 7 (greenfield project) commercial validation

By March '27
Current Under construction
Target First production ready for commercial validation

Why it matters

Significant new large-scale manufacturing capacity coming online, crucial for future growth and diversification.

We are creating a large manufacturing greenfield project, Unit 7, and the first production will be ready for commercial validation by March '27

Risks & concerns

  • Geopolitical disruptions impacting raw material availability and logistics

    medium

    Increasing geopolitical disruptions may impact raw material availability and logistics, potentially creating a near-term pressure on OTIF performance across the industry. However, the company has visibility for the next 3 months and expects to weather the challenge.

    Management acknowledged

  • Lumpiness in CDMO earnings quarter-on-quarter

    medium

    There could be lumpiness in CDMO earnings quarter-on-quarter, but management expects good growth in the CDMO segment year-on-year for FY27.

    Analyst acknowledged

  • Inventory destocking in CDMO sector

    low

    While inventory destocking impacts some CDMO players, Laurus's commercial APIs are early-stage, have long patent lives, and clear forecasts, mitigating this risk for their products.

    Analyst downplayed

  • Solvent price increase

    low

    A solvent price increase had some impact in Q4 FY26, but the company's production has not been impacted, and it expects to manage the challenge through operational mix and capacity utilization.

    Management acknowledged

Q&A highlights

6 direct, 1 evasive
Yield variability and commercialization of 400 KL fermentation capacity Direct
I think the initial batches, what we are going to take up in our expanded fermentation capacity is non-pharmaceutical, non-food also. It is mostly industrial chemicals, surfactants and then polymers. So where the tighter is very very high. See the biggest challenge in any fermentation is contamination and we don't have a very long tedious downstream processing for the products what we intend to manufacture in that facility. Wouldn't expect any challenges in downstream manufacturing, Sajal.

Clarifies the initial product focus for the new large-scale fermentation capacity, indicating lower risk for contamination and downstream processing.

Asked by Sajal Kapoor

Biotech capex, visible demand vs speculative capacity Direct
Our biotech initiatives spread across many things, biocatalysis, enzyme manufacturing, animal-origin-free cell culture ingredients, precision fermentation, cell therapy, gene therapy, fermentation of pharmaceutical intermediates. So what we are talking right now in our Unit 4 at Bio expansion at Vizag is only for non-pharmaceutical one. As you are aware, we are also investing in our gene therapy and ADC manufacturing facility in Hyderabad. And our subsidiary in Bombay, they are also investing further in our cell therapy CAR-T manufacturing. So there are multiple fronts going on, Sajal ji.

Provides a comprehensive overview of Laurus's diverse biotech investments and clarifies that current Vizag expansion is for non-pharmaceuticals, while other biotech areas are also being pursued.

Asked by Sajal Kapoor

CDMO product concentration risk and inventory destocking Direct
In the last 18 months, we delivered 3 APIs for commercial. And those have patent life of several years. So they're very early in their commercial phase. And based on indications from our partners, they gave a very clear forecast for the next several years. And we don't see any destocking challenges for these molecules at this point of time.

Addresses a key sector concern (inventory destocking) by stating their commercial CDMO products are early-stage, have long patent lives, and clear forecasts, mitigating destocking risk.

Asked by Bharath Siripurapu

Sustainability of 29% EBITDA margin and operating leverage Direct
We expect so, Bharath. So your point is very valid. So operational leverage will come. And see, we keep on expanding capacities. So we are at the border of leverage or deleverage. So next year, we expect some operational leverage will come. And see, as you observed, our EBITDA margins are going up. If you even look at 4 quarters of the FY '26, EBITDA margin continuously kept improving. So if you look at the Q4, it is almost at the 29% EBITDA margin.

Confirms expectations of operational leverage contributing to margin sustainability and improvement in FY27, building on the strong Q4 performance.

Asked by Bharath Siripurapu

CDMO pipeline conversion to commercial revenue in FY27 Partial
We are unfortunately not in a position to give you like very specifics in terms of what programs are we working on. But with that being said, there's multiple late-stage programs that we are currently involved in. But as you're aware, given the clinical nature of the compounds, we can't necessarily accurately put in and say that FY '27 will be the commercialization of that molecule or not. But yes, the pipeline is quite robust, and we're confident in continuing to post growing numbers in the CDMO side.

Highlights the inherent uncertainty in predicting exact commercialization timelines for clinical-stage CDMO projects due to their nature, despite a robust pipeline.

Asked by Mehul Panjuani

Peptide capacity and capex Evasive
We are building a large capacity for peptides and we have several programs, as Krishna mentioned. But we don't want to comment on how many tons capacity we are creating or how many projects we have right now. We don't want to comment at this juncture. ... I can only say it is large capex. I don't want to give a specific number.

Indicates significant strategic investment in the high-growth peptide segment, but management is withholding specific details due to competitive sensitivity.

Asked by Foram Parekh

ARV to non-ARV split for FY27 Direct
Quantum wise, we did INR2,800 crores ARV. That will remain constant. It will be around that number. But percentages, it will go down. It will go down.

Confirms the strategic shift away from ARV dependence, with ARV revenues remaining stable in absolute terms but declining as a percentage of total revenue due to growth in other segments.

Asked by Foram Parekh

AI impact on discovery phase Direct
So at a high level, Laurus within the CDMO space, we are not involved in the discovery side of things for any partners. But speaking from a general standpoint, there's certainly a lot of Al being leveraged in the discovery space. So what of that is some of the discovery molecules, the pipeline generation is significantly faster. But also interestingly, given that these molecules are designed by AI, they tend to be also more complex in terms of structures or the synthesis itself. So yes, there's certainly AI being leveraged globally, but given that we are not in the discovery space, that's not something that we typically look at.

Clarifies Laurus's current position in the value chain (manufacturing, not discovery) and its limited direct exposure to AI's impact on drug discovery, while acknowledging AI's broader industry influence.

Asked by Venkat

3 min read 7 chapters

Detailed narrative

Overall Performance and Strategic Transformation

Laurus Labs reported robust financial performance for FY26, with revenues growing 23% YoY to INR 6,813 crores. The company's EBITDA margin expanded significantly by 6.7 percentage points to 26.8% for the full year, reaching 28.9% in Q4 FY26. This performance reflects sustained demand for technology-driven commercial offerings and a successful transformation of its portfolio, with CDMO business now contributing over 30% of revenues, up from 13% six years ago. The company's ROCE improved to 17.7% from 9.7% in the previous year, demonstrating enhanced capital efficiency.

CDMO Business Growth and Outlook

The CDMO segment delivered strong operational execution, clocking INR 2,080 crores in FY26. Small molecule CDMO, a key driver, grew 38% to INR 1,896 crores for the year, with Q4 sales at INR 524 crores. This growth was fueled by late-stage pipeline programs, commercial NCE API supplies, and ramp-up of growth projects. Management expressed confidence in maintaining positive growth in CDMO, with a long-term target for CDMO revenues to constitute 50% of overall sales by FY30. They also noted that their commercial APIs are early-stage with long patent lives, mitigating inventory destocking risks.

Affordable Medicines (Generics) Performance

The Affordable Medicines division, formerly Generics, reported INR 1,223 crores in Q4 and INR 4,733 crores for FY26, marking an 18% growth. This growth was primarily driven by higher volumes in ARV and oncology portfolios, alongside strong traction from new launches in developed markets. The company maintained a consistent supply track record despite global supply chain challenges. For non-ARV formulations, the company expects continued growth by utilizing existing capacities and leveraging momentum from FY26.

Capital Expenditure and Capacity Expansion

Laurus Labs invested INR 335 crores in Q4 and INR 1,070 crores for the full year FY26 in capital expenditure. Over 75% of this investment was directed towards expanding CDMO and CMO capabilities. The company plans to spend approximately INR 3,000 crores over the next two years, with 90% allocated to mid- and large-scale manufacturing. Key projects include a new greenfield manufacturing unit (Unit 7) with first production by March '27, a commercial scale peptide manufacturing block ready by Q2 FY27, a Laurus Bio fermentation site by end of 2026, and a KRKA JV formulation facility by mid-2027.

R&D and Technology Focus

The company's R&D spending for FY26 was 4.1% of sales, an increase of 10% YoY, with a similar percentage expected for the next year. Investments are focused on product complexity, scale, and sustainable technology platforms, including biocatalysis, flow chemistry, hydrogenations, and continuous manufacturing. Laurus is also expanding its biotech initiatives into areas like enzyme manufacturing, animal-origin-free cell culture ingredients, precision fermentation, cell therapy, gene therapy, and fermentation of pharmaceutical intermediates, with current Vizag expansion for non-pharmaceutical applications.

Margins and Profitability

Gross margins remained healthy at around 60% for FY26, with Q4 reaching 61.4%, driven by better product mix and process improvements. EBITDA margins expanded by 6.7 percentage points to 26.8% for FY26, with Q4 at 28.9%. Management is confident in maintaining or improving these EBITDA margins in FY27, anticipating operational leverage to contribute to future profitability as capacities expand. Despite some impact from solvent price increases in Q4, the company expects to weather such challenges through operational mix and capacity utilization.

ARV Business Evolution

The contribution of ARV revenues to total sales has decreased from 67% six years ago to 41% in FY26, while absolute ARV sales remained robust at approximately INR 2,800 crores. Management expects absolute ARV revenues to remain constant in the coming years, but its percentage contribution to overall sales will continue to decline as other segments, particularly CDMO, grow significantly. This strategic shift reduces reliance on a single product category and diversifies the revenue base.

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