CDMO business is uneven – Revenue doesn’t come evenly each quarter; it’s “lumpy,” so some quarters may look weak even if the year is good.
No clear growth guidance – Management avoided giving exact numbers for CDMO or overall growth, which makes it hard for investors to predict results.
Delayed return on big investments – They’re putting in huge capex for new technologies (gene therapy, ADC, fermentation), but these will take years to bring revenue.
No income expected from new areas soon – Company clearly said there will be no meaningful revenue for 3–5 years from cell or gene therapy.
Heavy capex risk – About ₹8,000 crore spending planned over 8 years; success depends on winning new contracts and executing large projects well.
Lower asset utilization – Asset turnover is still below 1 ×; management admitted it may take two more years to reach better return ratios (~25%).
Manpower challenge – There’s high competition for skilled workers in South India; the company admitted recruitment and attrition are ongoing challenges.
Volatile margins – Past greenfield expansions hurt EBITDA margins before (fell to 12–14%); management hopes it won’t repeat, but risk remains.
Dependence on ARV (HIV) segment – Still a major revenue contributor; any cutback in global HIV procurement could hit sales.
Forex and interest-rate benefits may not last – Part of the profit boost came from foreign-exchange gains and lower interest cost, not just operations.
With so many hinderances in the short/medium term and no operational improvement in recent quarters, what is causing the recent up move? The price movement seems to be organic rather than a sudden jerk. Additionally, the ARV revenue hit looks like a significant risk factor.
The revenue growth is still reliant on ARV segment, CDMO being a lumpy segment and the delayed return on capex in newer areas ? Besides the management expectation itself is a bit unclear on short/medium term growth.
The price is paid for profit growth and margins..not for revenue .Laurus has been moving away from ARV for past few years and markets do not expect or bother about the ARV anymore .It is reducing as expected.
CDMO revenue has grown by 70-80% yoy for past 4 quarters and it contributes 65% profits already even though its only 25% by revenue. CDMO is lumpy by nature for everyone..Laurus is not unique in this.Market expects the growth to continue here hence the price .
Plus the promoter is known for his vision and confusing guidance ….thats not new either .So those who are ready to lump the lumpiness of the CDMO business ,have enough reasons to pin their hope on this one .
Disc. It was a doubler for me in 2021 but trusting Dr.Chava , resulted in near 0 profits as it halved again by the time I sold in exasperation. Now I trade in it but I do not trust anything Dr.Chava says anymore.
In the con call they have mentioned revenue guidance from ARV business. They have also mentioned tha CDMO small molecules are ramping up well. Mentioned that large molecules revenue won’t grow for next 5-6 quarters. Any revenue growth is possible only from end of the next FY.
