Laurus Labs (LAURUSLABS)

FairStock Score: 54/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong recent operating momentum: sales up 27.46%, profit up 321.11%, latest quarter sales ₹1,778 Cr and net profit ₹252 Cr.
• Healthy financial soundness signals: Piotroski F-Score 8/9, Altman Z-Score 5.52, and debt/equity of 0.46.
• Respectable return on equity of 18.86%.
• PEG of 1.10 suggests market may not be paying too much for the immediate growth rate.

Concerns

• Extreme valuation: P/E 68.87, P/B 13.62, EV/EBITDA 148.53, and Graham Number ₹170.91 imply a large negative margin of safety.
• Free cash flow is negative at ₹-78 Cr, suggesting reported profits are not yet converting into cash.
• ROCE of 9.15% is far below ROE of 18.86%, indicating weak overall returns on capital employed.
• Five-year revenue CAGR of only 2.90% makes the recent growth surge look unproven and possibly short-lived.

AI Analysis

At first glance, Laurus Labs has the ingredients of a growth story. Sales rose 27.46%, profits jumped 321.11%, and the latest quarter delivered ₹1,778 Cr in revenue and ₹252 Cr in net profit. The Piotroski score of 8/9 and Altman Z-score of 5.52 suggest the balance sheet is not in distress, and debt-to-equity of 0.46 is reasonable. ROE of 18.86% is decent. But I do not buy a business by its cover; I buy by the numbers and the price. At ₹1,128.80, the market capitalisation is ₹58,078 Cr, with book value only ₹82.85 per share. That means a P/E of 68.87 and a P/B of 13.62. Graham would ask what margin of safety exists. The Graham Number is ₹170.91, and the displayed margin of safety is -529%. In other words, we are paying over six times the conservative estimated value. Even a wonderful pharmaceutical business should not be bought at any price. EV/EBITDA of 148.53 is extreme. Negative free cash flow of ₹-78 Cr further bothers me; reported profit is not yet translating into cash. ROCE of 9.15% is much lower than ROE, telling me the overall enterprise is not deploying capital as efficiently as shareholders may think. The five-year revenue CAGR of just 2.90% is a warning: today's 27.46% sales growth is recent, not a long proven record. Promoter holding of 27.49% is moderate, and the dividend yield of 0.11% offers no income support. This looks like a fast grower, but value investing demands a difference between a good business and a good price. The PEG ratio of 1.10 makes the growth seem reasonably priced, but I need sustained free cash flow, better ROCE, and a genuine margin of safety before I would invest. Patience is better than paying ₹1,128.80.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer