The share price of Laurus Labs surged nearly 6 percent to hit its 52-week on Friday after rating agency CARE Ratings upgraded the stock. The rating on the company's long-term banking facilities has been upgraded to CARE AA from CARE AA- with a 'stable' outlook.

Share Market Live

NSE

The stock rose as much as 5.8 percent to its day's high of Rs 661.90 per share. In the last three months, the stock has zoomed 85 percent as compared to 9 percent gain in Sensex.

“The revision in the ratings assigned to the bank facilities of Laurus is on account of significant improvement in the total operating income and profitability margins during FY21 driven by volume sales under Formulation Dosage Forms (FDF) and Generic Active Pharmaceuticals Limited (API) such as antiretroviral 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,” CARE Ratings said in a press release.

It added that the ratings continue to derive strength from experienced promoters having a long-term presence in the pharma industry, strong product portfolio and geographically diversified customer base with a strong flow of repeat business mitigating the sustainability of revenue risk, comfortable capital structure and improved debt coverage indicators and stable outlook for the pharmaceutical industry.

The ratings are, however, constrained by elongated operating cycle, the concentration of revenue in terms of product and therapeutic segments & customers, ongoing capex for addition incapacity for formulations, APIs and for developing R&D capability, exposure to regulatory risk and foreign exchange fluctuation risk, CARE Ratings said.

During FY21, the company at consolidated level has achieved around 70.50 percent growth in its total operating income which stood at Rs 4836.42 crore. The revenue growth of the company was driven by robust demand for several key products.