Accumulate Divis Labs; target of Rs 1109: PLilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher is bullish on Divis Labs and has recommended accumulate rating on the stock with a target of Rs 1109 in its February 4, 2013 research report.
 
"Divi's Q3FY13 result was below our estimates, impacted by lowe profitability. Despite a healthy topline growth, EBITDA margins declined YoY due to higher power cost due to scarcity and adverse product mix. The company continues to report strong performance led by strong project pipeline and new product launches. At the current price, the stock trades at 22.2x FY13E and 19.3x FY14E earnings. Maintain .Accumulate. with target price of Rs1,109."
 
"Divi's revenue for the quarter reported growth of 28.6% YoY to Rs5.33bn, led by both CCS and API segments. However, the Neutraceuticals business remains flat YoY. The company is likely to achive 20% revenue growth in FY13 as guided earlier and has given its top-line growth guidance 20-25% for FY14. The company reported increase of 22% YoY in EBITDA during the quarter to Rs1.81bn, while EBITDA margins contracted by 180bps YoY to 34% on account of higher manufacturing expenses and adverse product mix. PAT reported growth of 18% to Rs1.44bn which is in line with EBITDA growth however partly impacted by higher depreciation cost and lower forex gain compared to 3QFY12."
 
"We expect 18% earnings CAGR over FY12-14 on the back of 19% revenue CAGR. Divi's is well positioned in the CRAMS space, given its strong relationships with innovators, presence across the CRAMS value chain and its ability to support the innovator in late life-cycle strategies. We expect Divi's to be a key beneficiary of the increased pharmaceutical outsourcing from India, given its strong relationships with global innovator pharmaceutical companies. The stock trades at 22.1x FY13E and 19.2x. We maintain Accumulate with a target price of Rs1,109," says Prabhudas Lilladher research report.

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