Shares of Divi's Laboratories surged over 5 percent on February 4 as investors rejoiced the company's solid earnings performance in the December quarter.
The drugmaker's net profit surged a whopping 65 percent on year to Rs 589 crore in Q3, also topping CNBC-TV18's estimate of Rs 507 crore. Revenue also grew 25 percent to Rs 2,319 crore, up from Rs 1,855 crore that it clocked in the year ago period. CNBC-TV18 had pegged Divi's revenue at Rs 2,287 crore, meaning that the actual number came in well ahead of expectations.
In addition, the company's operational performance also recorded a stellar improvement as EBITDA margin expanded by nearly 600 basis points to 32 percent from 26.4 percent last year, also beating expectations of 31 percent.
At 11.23 am, shares of Divi's Laboratories were trading at Rs 6,125 on the NSE. With gains in today's session, the stock also came at a kissing distance of its record high of Rs 6,285.45.
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Following the Q3 results, brokerage firm Jefferies maintained its 'hold' call on Divi’s Labs with a target price of Rs 6,280 per share. Jefferies noted that Divi's custom synthesis business remained the primary growth driver, while the generics segment also rebounded during the quarter.
However, generics pricing continues to face pressure, though higher volumes helped offset the impact, the brokerage stated. Moreover, while the company remains confident about its prospects in the GLP-1 segment Jefferies believes it must address the high product concentration of Sacubitril Valsartan in FY27.
Divi's sees GLP-1 as a key growth opportunity while it also expects margin benefits in the mid-term due to backward integration at its Kakinada plant. Nuvama Institutional Equities feels the drugmaker's new product additions (including GLP-1 components), can substantially offset the Entresto generic impact. Accordingly, the brokerage raised its FY26 estimates by 3–4 percent. Nuvama has a 'buy' call on the stock with a price target of Rs 6,830.
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