Profit before tax increased by 25% to Rs 328 crore in Q2 FY23 as against Rs 263 crore in Q2 FY22.

Total expenses soared by 68.21% to Rs 1,248.93 crore in the quarter ended 30 September 2022 as against the corresponding quarter last year. Cost of materials consumed was up 34.41% and finance costs surged by 81.25% in Q2 FY23 over Q2 FY22.

EBITDA in Q2 FY23 stood at Rs 449 crore, increased by 29% from Rs 348 crore in Q2 FY22. EBITDA margin de-grew to 28.5% in Q2 FY23 from 28.9% posted in Q2 FY22.

On the segmental revenue front, the synthesis division delivered strong growth of 365% year on year in Q2 FY23 to Rs 720 crore, led by business from existing customers and increased off-take. Expansion in CDMO capabilities was on track to capture new opportunities and accelerate growth. Income from API business rose by 29% to Rs 680 crore in Q2 FY23 over Q2 FY22.

The company's Formulation business generated income of Rs 149 crore, declining 70% year on year from Q2 FY22. Revenue was primarily impacted by softening demand and excess inventory led depressed pricing. Recovery is expected from Q3. Developed market growth remained stable with higher generic volumes.

The bio division recorded revenue of Rs 27 crore in Q2 FY23, higher by 4% on YoY basis. The company said that it anticipates pick up with ramp-up of new capacities. Demand outlook remains strong. The firm is evaluating few land parcels to further expand the manufacturing capabilities.

Commenting on the highlights, Dr. Satyanarayana Chava, founder and chief executive officer of Laurus Labs said, “In the first half of 2023 Laurus Lab's delivered healthy results. It reflects our efforts towards strengthening and diversifying our business by increasing revenues from CDMO and Non ARV API and formulations. ARV FDF performance was very weak, impacted by lower volumes and adverse pricing but we expect good reversal in H2.

We are also pleased to update on R&D progress where we have developed a novel delivery for pediatric HIV treatment and expect to file NDA shortly. This should significantly enhance our market position. Our capital allocation priorities remain unchanged. We will continue to prioritize investments in our pipeline and business within Non-ARVs to realize the value of the several mid and long-term opportunities in front of us. Looking forward to second half 2023, we expect to deliver a strong underlying revenue growth and stable EBITDA margins of approximately 30% in FY23.”

Commenting on the results announcement, V V Ravi Kumar, ED & chief financial officer said, “In Q2 FY23, Laurus Lab has continued its strong performance with 31% revenue growth to Rs 1,576 crore, driven by accelerated demand in our CDMO-Synthesis business and off-take in API business. EBITDA came at Rs 449 crore with EBITDA margins of 29% as favourable mix partially mitigating pricing impact in ARV business and negative operating leverage. During H1 FY23, our overall operational performance was healthy; revenues are up 26% to Rs 3,115 crore and EBITDA grew 21%. Our ROCE on annualised basis stood healthy 28% with comfortable balance sheet position. In H1, Laurus Lab invested a total of Rs 416 crore capex and we are on track to execute on our future capex as scheduled”.

Meanwhile, the board of directors approved an interim dividend of Rs 0.80 per equity share for the financial year ended 2022-23. The record date for the said dividend is 4 November 2022. The dividend amount will be paid on or after 15 November 2022.

Laurus Labs is a fully integrated pharmaceutical and biotechnology company, with a leadership position in generic Active Pharmaceutical Ingredients (APIs) and a major focus on anti-retroviral, Hepatitis C, and oncology drugs.

Shares of Laurus Labs lost 7.34% to end at Rs 487.45 on the BSE.