Laurus Labs: Q2 & H1 FY26 – Sustained Momentum and Strategic Expansion

Laurus Labs, a research-driven pharmaceutical and biotechnology company, has reported a robust performance for the second quarter and first half of fiscal year 2026, demonstrating strong growth across its key business segments. The company's H1 FY26 revenues reached an impressive INR 3,223 crores, marking a substantial 33% year-on-year increase. This growth was accompanied by a significant expansion in profitability, with H1 EBITDA climbing to INR 818 crores, translating to a healthy margin of 25.4%, an increase of 10.8 percentage points from the previous year. For Q2 FY26 alone, revenues stood at INR 1,653 crores, reflecting a 35% growth, and EBITDA margins reached 26.0%, driven by a favorable product mix and improved operational execution.

The Contract Development and Manufacturing Organization (CDMO) division continues to be a significant growth driver for Laurus Labs. In H1 FY26, CDMO revenues surged to INR 1,040 crores, an impressive 74% year-on-year growth, contributing 32% to the total revenues. The small molecules segment within CDMO was particularly strong, recording INR 964 crores in H1. For Q2 FY26, CDMO revenues were INR 518 crores, with small molecules at INR 471 crores. This robust performance is attributed to strong demand in complex small molecule offerings, successful mid-to-late phase program deliveries, and increased utilization of new manufacturing assets. The company's Bio segment also showed a healthy recovery, with Q2 sales of INR 47 crores, driven by de-risked customer base and commercial products. The Generics division also delivered consistent execution, with H1 FY26 revenues at INR 2,183 crores, a 20% growth, representing 68% of total revenues. Generic API contributed INR 1,254 crores and Generic FDF INR 929 crores in H1. In Q2 FY26, Generic revenues were INR 1,135 crores, with API at INR 617 crores and FDF at INR 518 crores. This growth was primarily fueled by continued uptake in ARV volumes and strong supplies to developed markets, complemented by completed capacity debottlenecking activities in key API businesses.

Strategic Investments and Future Growth

Laurus Labs is actively pursuing strategic investments to drive long-term profitable growth. A significant development is the allotment of 532 acres of land in Vizag by the Government of Andhra Pradesh, where the company plans to invest over US $600 million over the next eight years to establish a state-of-the-art pharma complex. This expansion is expected to materially strengthen its global position and manufacturing capabilities. The company also made a strategic investment of US$2 million in Aarvik Therapeutics, an ADC technology platform company, to gain access to next-gen Antibody-drug conjugates (ADC) technology and R&D capabilities, enhancing its integrated ADC services. Furthermore, construction for a Gene/Antibody drug conjugates cGMP facility in Hyderabad is underway, with completion expected by the end of 2026. This facility, with a planned CAPEX of over US $25 million, will enable the manufacture of Plasmids DNA, Viral vectors, Bio-conjugation, lyophilization, and Fill-Finish, addressing growing market demand. The LSPL amalgamation is also underway, aimed at strengthening capabilities in animal health and crop science, optimizing resource utilization, and simplifying the group structure.

Outlook and Management Commentary

Management expressed confidence in continuing the underlying momentum for FY26. Revenue drivers are expected to benefit from a robust CDMO industry outlook, clinical and commercial business momentum, and the ramp-up of growth projects. Generics growth will be supported by CMO opportunities and a stable ARV business. Margin drivers include higher underlying EBITDA margins, driven by better asset utilization, favorable product mix, and a continued focus on operational excellence. The company is committed to balance sheet discipline with ongoing CAPEX investments to support long-term growth. The Net Debt-to-EBITDA ratio has significantly improved to 1.3x from 3.4x in the previous quarter, and ROCE is progressing on track, reaching 16.3%. Management expects ARV sales to remain stable at around INR 2,500 crores, plus or minus INR 200 crores, and anticipates CAPEX for the current year to be around INR 1,000 crores. The company also expects Animal Health revenues to contribute meaningfully in the next financial year. Laurus Labs' strategic vision, coupled with strong execution and a focus on advanced modalities, positions it for sustained growth and enhanced shareholder value.