Laurus Labs - Can Business Transform to Next Level?

Stock Opportunities
1233

Hello.
Let me put my investment thesis for Laurus Labs. What I like
The co is founded in 2005 and has achieved a lot in last 2 decades

  1. Crossed revenue of 5000 cr
  2. Market cap of 20k cr
  3. Scaled up the ARV business very well
  4. Ventured into other businesses like Other APIs, FDF, CDMO, Bio, Other new therapies (Immuno act, etc.)
  5. CDMO business from marquee clients. Co, was able to win trust of CDMO clients . Speaks volumes about the quality of the capability and the leadership

How many cos can grow and create wealth this fast ? (question to self)

How the future looks. Lot of positives

  1. Well diversified revenue streams: ARV API, Other APIs, ARB FDF, Other FDF, Bio (mostly food grade), CDMO (Most value added), New therapies (Optionality and possible new revenue stream)
  2. Base is lower now considering the headwinds the co has faced last year and also at present
  3. Deliveries to start for CDMO projects and ARV orders in had for 2024, 2025 (2026 ?, need to check the recent investor presentation)
  4. Operating leverage to kick in considering some costs are front ended and margins to improve with contribution from CDMO business
  5. More than 50 (as per my memory) CDMO projects in different stages

What I don’t/didn’t like:

  1. Management not upfront about One off revenue, but now using it to their own advantage (while comparing numbers. Refer latest investor presentation)
  2. Going into FDF. I thinking they are filing some Para-IV s as well. Conflict of interest with CDMO customers
  3. Not sure about the management bandwidth to grow all the businesses. Not sure how well Dr. Chava can delegate the responsibilities
  4. Volatility in business and margins. CDMO revenue would also be lumpy (of course). ARV deliveries also are lumpy as per me
  5. IMO Valuation is not attractive even at current price
  6. Last 2 years co. didn’t walk the talk. Need to see how it goes going forward

Short thesis:
The co/management has created wealth for the shareholders at very fast rate. Hunger for growth is there. Good capable management (Could be better). Could be one of the biggest wealth creators in next 15-20 years. Only time will tell

Disc: Small position initiated today. I’m opportunistic with what/when I buy/sell as per mid term estimate valuation of the co. No reco my any means

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