Divi's Labs remains Citi's top pharma pick, sees 15% more upside

Divi's Labs shares are up over 52 percent year-to-date.

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26 Aug, 2025 12:21

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International brokerage Citi reiterated its bullishness over Divi's Laboratories by naming it as its top pick in the Indian pharma sector, driven by the drugmaker's expanding pipeline for its contrast media business. Accordingly, the brokerage held on to its 'buy' call on the stock, with a price target of Rs 6,850, which implies a potential upside of 15 percent from Thursday's closing.

Meanwhile, the US court's decision to stay the United States Food and Drugs Administration's approval of a generic version of Novartis AG's blockbuster heart failure drug, Entresto, brought relief to Divi's Labs. A potential generic launch could have intensified competition, adversely affecting sales of the drug Divi's manufactures for Novartis.

According to Kotak Institutional Equities, Divi's CDMO contract with Novartis for the blockbuster heart failure drug contributed around 8 percent of its total sales and 19 percent of its CDMO sales for FY24.

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Going ahead, Citi feels that Entresto's API (Active Pharmaceutical Ingredient) sales can actually increase rather the Street's expectations of a decline. It also believes that further growth in Entresto's sales and Divi's contrast media business may drive consensus upgrades for the stock.

Citi also views Divi's as structurally and tactically well-positioned. The company is anticipated to emerge as one of the largest Indian beneficiaries of the US Biosecure Act, which is expected to amplify the China+1 strategy among global pharmaceutical innovators seeking to diversify their supply chains beyond China.

Shares of Divi's Labs reacted positively to the Citi's bullish views, gaining 1.5 percent in opening trade. At 09.18 am, shares of Divi's Labs were trading at Rs 6,041.85 on the NSE.

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