Laurus has a remarkable track record in terms of both topline and bottomline growth over past few quarters. Its rare to find companies which can show such fast growth. Usually maximum money in a stock’s journey is made during its fast growth phase. Usually there is strong disbelief when a company grows so fast. The usual queries raised are those related to cash flows, balance sheet issues, or promoter issues. The other question vexing investors in such growth stories is how long is this growth going to last?
Listening to the concall post results provides a clear idea about where the company is going. It seems Dr Chhava has mapped out the growth path of Laurus and is going on that path with sure footed approach. With acquisition of Richcore, he has put a foot in biiologicals space. My guess is next he will try to acquire injectable assets. He is trying to put in building blocks for long term consistent growth. The only worry sometimes is “Is it too fast”. But as long as numbers keep coming through, as investors we remain assured about the company’s prospects.
Ajanta during its strong growth phase also suffered from similar issues. Even with very strong quarterly results, the stock price used to correct and that too when valuations were sub 10 PE. But over a period of time as the numbers keep coming, market participants come around to accepting the company as a strong growth story and give appropriate valuations. So Laurus correcting immediately post quarterly numbers is nothing new. And a lot of punters take ultra short term positions in the run up to results and because of whatever reason if the stock does not go up, they are the first to bail out of their positions at whatever prices.
Technically the previous major top of Laurus was at 340-45 range from where it fell down to post a bottom in the region of 250-60. Now after taking out its top during the latest upmove it seems to be taking support at 340-45 region. But we still need to see for few more days, After posting a bottom at 255, Laurus has broken out of a cup and handle pattern above 340-45, with target of 420 plus.