Hello everyone, I am also a naive investor, but I believe their investment in Richcore would bring good revenue in coming years. You ask any of younger generation, I asked, and they would tell you that “They love eating steaks, but they don’t like animals being killed for it”. Livestock are responsible for 14.5% of global greenhouse gases and they don’t like it. Younger generation are more sensible to environmental issues than older ones. In future, the world would have lesser biological attacks like COVID, if humans get virus free plant based meats, which tastes better than the popular meats including the neighborhood popular meats. Richcore is into development of “non animal proteins”. In order to achieve nationally determined contributions committed by the world by 2030, each nation should embrace and commit themselves to plant based meats. If Richcore can develop protein molecules for “Beyond Meat” and others, then sky is limit.
Phase 2 trials getting started . Still 20-30 lakhs is still not affordable for majority of Indians but if it is successful then it will be a breakthrough .
Hi Everyone, this is my first post in the community. I have been tracking this company from last two years. Am comfortable with future growth and current valuations. One thing which is bothering me is audit committee. This is w.r.t Mr.Chandrakanth Chereddi (Son in Law of Dr.Chava), he was ED till FY19, Non ED from FY20 and he is now the member of Audit committee. Is this a corporate governance issue? Would be very helpful if seniors share their opinion on this.
Don’t see how it can be …
Audit committee is supposed to ensure that the company follows the processes(financial reporting included) to be audit compliant .They keep the company audit compliant but they are not the auditors themselves. So someone who is part of or related to the promoter is perfectly entitled to serve as part of audit committee.
Disc. Google acquired knowledge 
Latest credit rating - Good summary of the business
23062022071102_Laurus_Labs_Limited.pdf (careratings.com)
AGM Updates:
A thread from Bharat Shah containing Q&As of AGM.
Audit committee and auditors are separate. Internal Auditors present their findings to Audit committee. Also, Audit committee is a subset of Board of Directors. Similarly Risk committee is also a subset of board of directors. I hope this helps.
Thanks Jaspreet, Audit committee should be vigilant about activities in the company, My concern is if members of audit committee are family members or relatives then the primary function of the committee can be compromised.
very nice analysis. some points…
-
Business is highly capital intensive…They have done so much capex in last 10 years…and they are doing continuously…now every year 2000 cr.
-
major products have been disrupted permanently in last 5 years. .ARV API, Hep-C…There is no moat in pharma businesses in general…so applies to Laurus too…Every 5 years…it has to evolve itself…sometimes upside down…total 360 degree change…
-
other Related party issues are there…but not significant, i feel…
But this business is not for weak hearted investors…And it cannot be a coffee-can type investment, for sure…
One of the things which didn’t make sense was the point on margins:-
Business mix has substantially changed from being a one product company to a diversified Pharma co. Some part of margin improvement is structural and is here to stay in my view. As formulations and CMO business will ideally have higher margins than API business.
Yes the business will require capex to grow.
The business generates cash flow, the management reinvest part of the cash flow into the business. That’s how you build the gross block to generate revenues. There is no other ways of high revenue growth in such business. It all comes down to how much cash flow can the company generate and how capable is the management to take quality decisions to reinvest back into the business. All other narratives will come and go with the market cycles. Just my 2 cents.
The shift from Generic API & ARV is obvious , moving in to CDMO & Biotechnology segment will be key driver for Laurus, also the capacity they will build in in FDF, API, Fermentation(BIO) & moving into novel technology related to cell therapy will makes the difference, still it has a long high way to run, will cautiously watch management’s commentary & execution
Don’t you need to add Investments to Non-operating assets?
Laurus Q1 FY23 Results Press release
Revenue at ₹ 1,539 crs, up 20 % (Y-o-Y)
EBITDA ₹ 454 crs, increased by 14 % (Y-o-Y)
EBITDA margins at 29.5 %
PAT at ₹ 251 crs, increased by 4 % (Y-o-Y)
PAT margins at 16.3 %
EPS (Diluted) for the period at ₹ 4.7 per share (not annualised)
Chief Executive Officer Dr. Satyanarayana Chava stated
“Laurus Lab’s performance in the first quarter of the current financial year reflects our efforts towards strengthening and diversifying our business by an increased focus on Non-ARV APIs and Formulations and high-growth CDMO segments. This strong momentum has been delivered because of our efforts toward a sustainable supply chain, capacity creation, and on-time delivery of products during the current challenging environment. Pricing pressure in ARV APIs and the Formulation business was significant during this quarter, and ARV FDF volumes would increase in the coming quarters. The high-margin CDMO business growth helped the organization deliver very good revenue
and profit.
Business Highlights
Overall
Total Income for Q1FY23 at ₹ 1,539 crs with 20% growth (Y-o-Y).
Performance driven by strong traction in Synthesis business (+196% YoY), and Other APIs
which more than compensated for overall ARV business decline
R & D spent of ₹ 49 crs (3 % of Revenues)
Generic FDF
FDF business generated revenue of ₹ 349 Cr during Q1, decreased by 33% YoY Growth was impacted by lower ARV business while Developed market sales stable with higher generic volumes offset by pricing pressure
During Q1, 1 product dossiers were filed in Developed markets and a total of 3 approvals were
received (including Tentative)
Cumulatively filed 32 ANDAs in US with 15 PARA IV filings and 11 FTF opportunities
Brownfield capacity expansion at Unit 2 commissioned during the quarter
Generic API
API business reported revenue of ₹ 583 Cr during Q1, increased by 6% YoY
Other APIs sustained strong growth +79% YoY
Oncology revenues grew at modest pace +5% YoY
ARV business continue to witness healthy sequential improvement supported by channel stock
easing and better volumes
Filed 325 patents out of that 192 patents granted as of June’22
Filed 74 DMFs till date.
Synthesis
Delivered accelerated growth of 196% during Q1 to ₹ 577 crs
The growth was supported by solid demand from new and existing clients
Actively working on over 50 projects and On-going supplies for four commercial projects
Expansion in CDMO capability on track to include new opportunities and extended service
Greenfield investment to set up a dedicated R&D center and manufacturing units is progressing
as per our expectations
Bio Division
Laurus Bio segment was largely stable and clocked Q1 sales of ₹ 30 cr
Fully operational benefits of new capacities to reflect through FY23
Continue to work on Improving Products offering and Improving Go-to-market
Evaluating few land parcel to Create close to 1 million litres fermentation capacity
Investor presentation:
SCO_IS_KM_322072710420 (bseindia.com)
Q1 Results
SCO_IS_KM_322072710420 (bseindia.com)
Brilliant nos. from Laurus Labs. Some key insights from investor presentation.
- Synthesis revenues have increased to 577 Crores from 190 crores YOY and 360 crores QOQ. Synthesis revenues now same as API’s at 37% of overall sales. Massive diversification in product mix from IPO, when ARV API’s constituted 80% of sales. Clear demonstration by company in identifying where the puck is moving.
- FDF revenues declined by 33% to ₹ 349 cr, mainly dragged by lower ARV business. This is a positive, and corroborates Dr. Chava’s statement of reducing dependence on ARV business, wherein he said by 2025, only 1/3rd of Laurus’ total revenues will come from ARV’s as compared to 55% in FY’22. Even if we assume, the entire FDF sales comes from ARV’s, the contribution of ARV’s to the total sales mix has already reduced to 47%.
- Laurus Synthesis - Target to become Self-Reliant subsidiary by FY2025.Demerger of the synthesis business may be on the cards in a couple of years.
- Laurus Bio
- List item
Strong market dynamics - Alternate food protein
Plan to meaningfully enhance fermentation capability by FY24
With 1 Million fermentation capacity in the next couple of years, Laurus Bio can see an exponential growth trajectory similar to synthesis. Alternate food protein could be a massive opportunity, if we see how the market have evolved in USA and Europe.
All in all, the growth levers are in tact and Laurus is well poised for the next round of scale up from here.
D: Invested.
Though results are fantastic, i would like to caution that this bump in CDMO may be due to the large order they won few months back. They didn’t divulge any details but there’s a talk that’s it’s pfizer paxlovid (COVID oral drug) . If they are stocking up the drug then it might have caused the bump. Like COVID stocking of ARV drugs this might be another one off. This is my view.
Disclosure : holding since August 2020.
CDMO qoq bump is normal, if this sudden jump leads to abrupt valuation of stock then it’s a matter of concern, otherwise as mkt is side ways & bearish I don’t think stock will run too much, CDMO should measured on Yoy basis, & lumpiness is normal
Lumpiness is one thing, we don’t know weather COVID will be there next year or it will completely disappear. United States is stocking up its paxlovid reserves. I don’t know weather they will place similar order next year or the orders could be zero. Or may be I’m completely wrong. We won’t get clarity unless the management gives us any details.
Q1FY23 discussion on BQ.
