Divi's Labs shares extend gains for 3rd day, rise up to 2.5%; Jefferies upgrades to 'buy' from 'hold'

Divi's Labs shares extend gains for 3rd day, rise up to 2.5%; Jefferies upgrades to 'buy' from 'hold'

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26 Aug, 2025 12:21

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Shares of Divi's Laboratories rose up to 2.5% on August 23, thus reaching their highest level since August 6, as global brokerage Jefferies has upgraded the stock to "buy" and raised its price target to Rs 7,150 from Rs 6,750 earlier.

The stock was up for the third straight session, rising 5% during this period. However, it came off highs later in the day, and at 1:45 pm, the stock was trading 1.7% higher at Rs 6,257. The target price implies Jefferies sees up to 12% upside for the stock from the current level.

Jefferies believes Divi's has the best GLP-1 or glucagon-like peptide-1 pipeline among Indian contract research, development, and manufacturing organisations.

The brokerage sees the company to be a key candidate to benefit from the China Plus One strategy. The China Plus One strategy is a global business trend where companies diversify their manufacturing and supply chains by adding alternative investing locations outside China, rather than solely relying on the Asian country.

The company's generic division is seen showing some growth. New launches in generics are expected to drive growth recovery, leading to a 14% compounded annual growth rate in sales and a 20% compounded annual growth rate in earnings before interest, tax, depreciation, and amortisation from 2024-25 (Apr-Mar) to FY28, the brokerage said.

From the contract manufacturing space, Sai Life Sciences is Jefferies' top pick, with a revised price target of Rs 1,100 from Rs 1,000 earlier.