Laurus Labs Share Price in Focus: Motilal Oswal reiterates ‘BUY’, sets Rs 1,280 target amid strong CDMO execution - Here’s why

Laurus Labs Share Price in Focus: Motilal Oswal Financial Services has reiterated its ‘Buy’ rating on Laurus Labs, maintaining a target price of Rs 1,280, citing superior execution and a strong medium-term growth outlook driven by scale-up in high-margin segments. Here’s why

1. The brokerage points out that Laurus Labs has shown better execution than the peer group, with revenue growth of about 30 per cent on a year-over-year basis in 9MFY26.

2. This was driven by a strong EBITDA margin of about 26 per cent, which is a good indication of operating leverage and product mix.

3. The expansion in the CDMO (Contract Development and Manufacturing Organisation) and formulation businesses has been an important driver of growth, which has mitigated volatility in other businesses and improved profitability.

4. According to Motilal Oswal, Laurus’s superior growth trajectory is underpinned by strategic capacity creation undertaken over the past few years.

5. Elevated capital expenditure in the CDMO segment has enabled faster pipeline conversion and positioned the company to capture incremental opportunities from global innovator clients.

6. As new capacities stabilise and utilisation improves, operating leverage is expected to further enhance margins.

7. The brokerage believes Laurus is undergoing a transition into a more diversified and stronger business model, which will be less dependent on any single therapy or geography.

8. The scaling up of high-value CDMO projects, along with progress in the formulations business, is likely to fuel sustainable earnings growth in the medium term.

9. Motilal Oswal expects Laurus Labs to close FY26 with a PAT of Rs 8.5 billion, supported by continued revenue momentum and margin resilience.

10. Over FY26–FY28, the brokerage estimates a – 16 per cent CAGR in earnings, driven by expanding CDMO revenues, improved asset turns, and stable demand in key markets.

11. The report highlights that the visibility of growth at Laurus is still strong, driven by a strong order book, improving client engagement, and continued investment in complex and differentiated capabilities.

12. With execution remaining ahead of the peer group and earnings recovery momentum building, the brokerage house sees favourable risk-reward profiles at current levels.

13. Reiterating its constructive stance, Motilal Oswal maintains that Laurus Labs is well-positioned to benefit from industry tailwinds in global outsourcing and speciality pharmaceuticals.

14. The Rs 1,280 target price reflects confidence in sustained margin expansion, steady cash flow generation, and disciplined capital allocation over the coming years.

Shares of Laurus Labs rose 4.48 per cent in pre-market trade on Thursday, February 26. The stock was trading at Rs 1,075.95 at 9:00 AM, compared with its previous close of Rs 1,029.85.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)