This Mid Cap Stock Has A “BUY” Call From Motilal Oswal With A Gain of +43%

The stock of Laurus Labs Limited has been recommended to buy by Motilal Oswal Financial Services Limited, one of Indias top brokerage houses, with a target price of Rs. 690, representing a gain of +43 percent over the current market price of Rs. 482. Laurus Labs is a major pharmaceutical and biotechnology firm having more than 55 state-of-the-art R D labs in India and the US. According to the brokerage Laurus Labs has signed an investment agreement with Immunoadoptive Cell Therapy Private Limited (ImmunoACT), an advanced cell and gene therapy company, for a 26.6% stake in the company (on a fully diluted basis) for a cash consideration of approximately INR460m, implying an enterprise value of INR1.7b.The senior management would also invest INR98m in ImmunoACT for a 5.64% stake at the same price and terms. This investment would provide LAURUS access to CAR-T therapy, a promising treatment option with great success in the western world. CAR-T therapy is not available in India. This collaboration would help Laurus provide this novel technology to Indians at very affordable pricing. The current promoters of ImmunoACT would continue to lead the management and operations after the completion of the acquisition of the minority stake by Laurus the brokerage clarified. Motilal Oswal has also claimed that CAR-T cell is a new therapy for Leukemia/Lymphoma, with USD1.5b in worldwide sales of five commercialized products. Given that ImmunoACT products are under development, the commercialization would be subject to a successful clinical outcome. However, this represents LAURUS entry for a potential CDMO opportunity into a new therapy space over the next 4-5 years.Advertisement Motilal Oswal has said in its research report that We expect a 21% earnings CAGR over FY21-23E, led by a 42%/30%/3% sales CAGR in the Synthesis/FDF/API segment and ~80bp margin expansion. We value LAURUS at 24x 12M forward earnings to arrive at our TP of INR690. According to the brokerages call We remain positive on LAURUS on the back of a robust outlook for the Synthesis CDMO segment, with a strong client base, potential in the Biologics CDMO segment with capacity additions, product development/capacity additions in the Non-ARV segment, the healthy order book of the Non-ARV API business, and the potential opportunity from Molnupiravir sales in LMIC countries. We maintain our Buy rating. The stock has been picked from the brokerage report of Motilal Oswal Financial Services Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.