Laurus Labs has built a solid foundation on its ARV generics business and has leveraged this stable base to develop a fast-growing CDMO (Contract Development and Manufacturing Organisation) segment. The high-value CDMO vertical now contributes 30% of revenues in H1FY26, up from 19% in FY21, reflecting strong traction over the past two years. The company is now entering a new investment phase to expand CDMO capabilities and add specialised modalities for long-term growth.
Despite a 75% stock rally last year—which pushed one-year forward valuations from 37x to 62x earnings—the growth outlook remains compelling. Therefore, we recommend investors hold the stock, given the expansion in the CDMO platform and continued visibility across segments.
CDMO Small Molecules Gain Strong Momentum
The CDMO small-molecule segment continues to scale rapidly. Laurus Labs now handles 110 active projects, including 15 commercial supplies, mainly with medium to large global pharma companies. The division reported 88% year-on-year growth in H1FY26, following 49% growth in FY25.
CDMO Large Molecules Expands Capacity and Capabilities
Laurus Labs is also accelerating its CDMO capabilities in large molecules, including biologics, peptides, and proteins. Although revenue contributions remain modest and below expectations, the company is investing aggressively in new capacity. It is doubling its fermentation capacity with a new 400 KL facility in Visakhapatnam, expected to be operational by end-CY26, complementing its existing 200 KL unit in Bengaluru. This marks the first phase of a multi-phase expansion plan aligned with customer requirements, providing long-term revenue visibility.
The company has established expertise in complex biologics through its associate ImmunoACT, an IIT Bombay–incubated venture that manufactures NexCAR19, a CAR-T therapy approved for relapsed or refractory B-cell lymphomas and leukemias. Laurus Labs is also building capabilities in cell and gene therapy and has developed integrated expertise in antibody-drug conjugates (ADCs)—specifically the linker and toxin components. Mid-term growth is expected from fermentation-based revenues (FY27 onward), while ADCs and cell therapies represent longer-term opportunities. These capabilities position Laurus Labs as a comprehensive outsourcing partner for global pharma.
Generics Business Remains a Stable Engine
As reported by Pressreader, the generics segment comprises ARV APIs for HIV treatment and non-ARV products, including high-potency oncology drugs. ARVs remain the company’s core and stable contributor. Supported by debottlenecked capacities and increased demand, ARV revenues grew 20% over the last three quarters. The company expects this segment to remain steady at current revenue levels.
In non-ARVs, growth is driven by CMO operations and the company’s own formulations portfolio for the US and Canadian markets. Laurus Labs is expanding its CMO oral solids capacity in Visakhapatnam and is constructing a new facility through a joint venture with KRKA, the European pharmaceutical major. Under its own formulations strategy, the company aims to secure leadership positions in 15 key molecules.
Entering a New Capital Expansion Cycle
Laurus Labs is now embarking on another significant capex cycle. The previous investment phase enabled its transition from a generics-led business into a CDMO-driven organisation, while an earlier phase diversified its generics portfolio with non-ARVs. This new capex round will expand CDMO operations for both small and large molecules, while simultaneously increasing generics and CMO capacity.
The company plans to invest ₹5,000 crore in Visakhapatnam, with a five-year capex outlay of ₹1,000+ crore annually. A large portion of this investment will support the small-molecule CDMO division due to strong order visibility and customer demand. The expansion also includes scaling up fermentation capacity to meet future biologics and advanced therapy manufacturing needs.