The rating on long-term bank facilities Rs1,930.64cr (Enhanced from Rs1,291.81cr) has been upgraded to CARE AA; Stable from CARE AA-; Positive. The rating on short-term bank facilities Rs473.20cr (Enhanced from 373.20) has been reaffirmed at CARE A1+.
The credit rating agency also assigned CARE A1+ rating on Commercial Paper Rs200cr. For Commercial Paper (Carved out) Rs100cr (Reduced from Rs200cr) CARE A1+ rating was reaffirmed. Total short-term Instruments rated were Rs300cr.
At around 2.08 pm, Laurus Labs Ltd was trading at Rs658.40 per piece up by Rs32.8 or 5.24% from its previous closing of Rs625.60 per piece on the BSE. The company stock hit a record high of Rs682.95 per piece during intraday trade on Friday.
“The revision in the ratings assigned to the bank facilities of Laurus Labs Limited (Laurus) is on account of significant improvement in the total operating income and profitability margins during FY21 (refers to the period April 01 to March 31) driven by volume sales under Formulation Dosage Forms (FDF) and Generic Active Pharmaceuticals Limited (API) such as antiretro-viral and oncology segment, generation of healthy cash accruals providing the adequate liquidity comfort, continued incremental demand from existing clientele in non-ARV (Anti-retroviral) segment, completion of strategic acquisitions to augment growth in formulation and synthesis division,” company shared the rating rationale of CARE in a filing on Thursday.
It further said, the ratings continues to derive strength from experienced promoters having long-term presence in the pharma industry, strong product portfolio with perceptible presence in ARV, Oncology and Hepatitis C therapeutic segments, reputed and geographically diversified customer base with strong flow of repeat business mitigating the sustainability of revenue risk, comfortable capital structure and improved debt coverage indicators, regulatory approvals from various regulators for the manufacturing and Research and Development (R&D) facilities of Laurus and stable outlook for the pharmaceutical industry.
The ratings are, however, constrained by elongated operating cycle, concentration of revenue in terms of product and therapeutic segments & customers, ongoing capex for addition in capacity for formulations, APIs and for developing R&D capability, exposure to regulatory risk and foreign exchange fluctuation risk.