Stock To Buy: Midcap Pharma With Strong Growth Prospects & Bright Expansion Plans

With some pharma stocks, including the big names seeing a decline in their share prices, it maybe time to look at companies that have a strong growth potential, strong product range and recent beneficiaries of policy changes.

Buy the stock of Laurus Labs

One such stock that has the potential according to broking firm Sharekhan, is the stock of Laurus Labs.

"Recently, the Drug Controller General of India has issued restricted emergency use approval for the first oral anti-COVID drug - Molnupiravir - for treating adult COVID-19 patients, following an EUA by the USFDA. Merck, Sharpe & Dohme (MSD), who has jointly developed Molnupiravir, has entered in to an agreement with MPP for Molnupiravir for LMICs. Laurus, in turn, has a contract with MPP for Molnupiravir for LMICs, including India. With the onset of the new variant of concern - Omicron, the DCGI's approval and MPP contract collectively point at substantial growth opportunities for Laurus," Sharekhan has said.

New acquisition to drive long term growth

Laurus Labs had recently acquired a 26.6% stake in ImmunoACT, which is an advanced cell and gene therapy company and has a portfolio of CAR-T cell therapy assets under various development stages for treatment of multiple auto immune diseases and oncology indications.

According to Sharekhan, the the CAR-T therapy is an advanced therapy and offers material advantages over the existing therapy areas of chemotherapy/stem cell transplant.

"In India, CAR-T therapy is unavailable and this collaboration will help Laurus bring this novel technology for Indian markets at a very affordable pricing, which bodes well from a growth perspective," the brokerage has said.

Buy with a price target of Rs 735

Current market price  -	Target price -	Potential gains -
Rs 530	Rs 735	38.00%

Sharekhan has set a target price of Rs 735 on the stock of Laurus Labs, which implies potential gains of nearly 38% from the current levels.

"At the current market price, the stock trades at 25.3x/18x its FY2022E/FY2023E EPS and the stock price had corrected by 24% in the past four months. While near-term headwinds - channel de-stocking and high costs - could overweigh on the performance, long-term growth levers stay intact. Hence, we reiterate our Buy recommendation with an unchanged price target of Rs 735," the brokerage has said.