Contract Development and Manufacturing Organization (CDMO) companies Sai Life Sciences and Laurus Labs achieved new highs on Friday's trading session, with Sai Life Sciences trading at ₹1,187.65 (up 2%) and Laurus Labs at ₹1,449.90 (up 1%). According to reports from Business Standard, these gains occurred in an otherwise tepid market environment, with the BSE Sensex remaining flat at 74,371 during the same period. The strong performance demonstrates the sector's resilience and investor confidence in CDMO companies' growth prospects.
The CDMO sector has significantly outperformed broader market indices over the past six months, as reported by Business Standard. Laurus Labs surged 40% during this period, while Sai Life Sciences gained 35%, compared to a 14% decline in the BSE Sensex. In the past month alone, Laurus Labs and Sai Life soared 23% and 10% respectively, contrasting sharply with the 4.2% decline in the benchmark index during the same timeframe. The latest data shows that despite geopolitical tensions and stretched valuations affecting broader markets, these midcap stocks have delivered exceptional returns of 100% and above.
According to Business Standard reports, Sai Life Sciences management reiterated their long-term guidance during recent meetings. The company projects 15-20% revenue compound annual growth rate (CAGR) with 28-30% steady state EBITDA margin over the next two to three years. Management remains constructive on the company's medium-term growth outlook, supported by a strong and diversified late-stage pipeline, increasing commercialisation of internally developed molecules, and expanding capabilities in emerging modalities including peptides, oligonucleotides and ADCs (Antibody-Drug Conjugates).
Laurus Labs delivered exceptional Q2FY26 performance with consolidated revenue of ₹15,696 million, representing a 31.4% year-on-year growth and significantly beating estimates by 15%. The strong performance was driven by robust formulation sales backed by ARV revenue and superior CDMO segment mix. The company achieved 6% beat on revenue, 18% beat on EBITDA, and 38% beat on PAT, demonstrating superior operational leverage. According to latest reports, the CDMO segment revenues grew 58% year-on-year, while Generic FDF grew 58% to ₹518 crore and Generic APIs segment grew 11% to ₹617 crore. EBITDA margins improved significantly to 24.4%, marking a 979 basis points improvement year-on-year.
According to Business Standard reports, brokerage firms maintain positive outlooks on both companies. JM Financial Institutional Securities maintains a 'Buy' rating on Sai Life Sciences, expecting the company to deliver revenue/EBITDA/APAT CAGR of 26%/28%/25% over FY26–28E, valuing it at 28x FY28E EBITDA with a target price of ₹1,371. Choice Institutional Equities notes that profitability may see slower growth due to elevated capex, while Kotak Institutional Equities highlights improving medium-term visibility in CDMO with the evolving product mix supporting margin expansion. Recent analyst reports show a consensus target price of ₹1,245 for Laurus Labs, representing a 13.93% downside from current levels, with the stock trading at ₹1,446.80.
