Deven Choksey's research report on Divis Laboratories
Revenue stood at INR 25,850 Mn., up 12.2% YoY, below our estimates by 9.1%, led by weaker growth in Custom Synthesis segment. EBITDA came in at INR 8,860 Mn., up by 21.2% YoY (+19.2% QoQ), largely in-line with our estimates. Adj. net profit stood at INR 6,620 Mn., up by 23.0% YoY (+12.4% QoQ), below our estimates by 4.2%, led by lower other income. We have revised our FY26E/FY27E EPS estimates by -1.8%/-6.5%, as we bake in lower revenue growth and, reduced other income led by lower fixed income yields. We are positive on the medium to long term growth trajectory, led by robust order pipeline and top-line growth driven by contract manufacturing. Margins are expected to expand led by the commercialization of Custom Synthesis contracts.
Outlook
We value Divi’s Labs at 52.5x FY27E EPS, implying a target price of INR 7,518. We maintain our “ACCUMULATE” rating on the stock.
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