Laurus Labs shares fall 6% after Kotak downgrades to ‘sell’

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Shares of Laurus Labs fell 6% on September 12 after Kotak Institutional Equities downgraded the stock to “sell” from “reduce” with an unchanged target price of Rs 300.

The brokerage firm said that the downgrade is due to the following reasons:

  • Laurus’ Synthesis segment is currently trading at a premium of more than 25% higher than Syngene. Considering the significant differences in their capabilities and size, Kotak finds it hard to justify this premium.
  • Laurus Labs is heavily reliant on antiretroviral (ARV) active pharmaceutical ingredients (APIs) and formulations. The company has said that it will focus on non-ARV products targeting diabetes and cardiovascular to drive growth, but Kotak believes that this will take time to materialize.
  • Even though Synthesis is expected to achieve strong medium-term growth, it is unlikely to fully offset the slow performance of ARV until at least FY26.

As a result of the downgrade, Laurus Labs shares fell to a low of Rs 386.05 on the BSE.

The company’s management has said that it is committed to its growth plans and is confident of achieving its targets. However, the downgrade by Kotak is a sign that investors are concerned about the company’s near-term prospects.

It remains to be seen whether Laurus Labs will be able to meet its growth targets and justify its current valuation.


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