Accumulate Divis Laboratories; target of Rs 6250 Prabhudas Lilladher

Prabhudas Lilladher's research report on Divis Laboratories

Divi’s Laboratories (DIVI) Q3FY25 EBITDA was 10% above our estimates led by higher custom synthesis (CCS) revenues (up 44% YoY). We expect GMs to improve, led by better product mix and stable raw material prices. Mgmt. suggested that moderation of raw material prices, increasing RFP’s and commencement of some CDMO and contrast media contracts, will continue to aid revenues and margins. Our FY26E/FY27E EPS estimates stands increased by 4%.

Outlook

We expect 24% EBITDA CAGR and PAT CAGR over FY25-27E. At CMP, stock is trading at 47x FY27E EPS. We Maintain our ‘Accumulate’ rating with revised TP of Rs6,250/share, valuing at 50x FY27E EPS.

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