Accumulate Divis Laboratories; target of Rs 6435: KR Choksey

KR Choksey's research report on Divis Laboratories

DIVISLAB revenue beat our estimates (+3.9%) due to strong growth in Custom Synthesis segment. EBITDA beat our estimates due to better-than-expected gross profit and lower than expected employee expenses. Adj. PAT was beat due to lower-than-expected effective tax rate. We increase our FY26E/FY27E EPS estimates by 3.8% and 8.7% to INR 111.9 and INR 153.2 respectively, as we anticipate sustained doubledigit growth in Custom Synthesis segment with a focus remains on scaling up high-value projects.

Outlook

With a robust pipeline, increasing global demand, and strategic investments in backward integration, the company is well-positioned for long-term sustainable growth and margin expansion in the coming quarters. We roll over our valuation multiple to FY27E and assign a PE multiple of 42.0x to arrive at a target price of INR 6,435 (previously: INR 6,357) and maintain our “ACCUMULATE” rating on the stock.