Motilal Oswal's research report on Divis Laboratories
Divi’s Laboratories (DIVI) delivered in-line revenue. However, it reported better-than-expected EBITDA/PAT led by a better product mix and lower tax rate (due to the shift to a new tax regime). The custom synthesis (CS) business continues to improve for eight quarters now. The generics business has been gradually witnessing stability on a QoQ basis. We broadly maintain our estimates for FY25/FY26/FY27. We value DIVI at 50x 12M forward earnings to arrive at our TP of INR6,200. We expect a 25% earnings CAGR over FY25-27, driven by improved capacity utilization at Kakinada and healthy traction across key segments.
Outlook
the cash of INR36b provided enough cushion to drive up projects if required. However, the current valuation provides limited upside from current levels. Reiterate Neutral.
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