Sharekhan's research report on Divi’s Laboratories
Divis registered weak performance in Q2FY2023 with revenue declining by 7% y-o-y to Rs. 1,854.3 crore and PAT down by 25% y-o-y to Rs. 463 crore. Established capabilities, backward integration, focus on quality, and benefits of scale coupled with major capacity expansion plans commencing are positives that could support growth in the long run. The company is working on measures to mitigate the cost pressures, which will help in gradual recovery in OPM in the coming years.
Outlook
We maintain our Buy recommendation on Divis’ Laboratories Limited (Divis) with a revised PT of Rs. 3,975. The stock has corrected by 23% in the past six months and is currently trading at 36.8x and 30.8x its FY2023E/FY2024E earnings.
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