Buy Divi's Laboratories; target of Rs 4425: ICICI Direct

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ICICI Direct's research report on Divi's Laboratories

Revenues grew 33.4% YoY to Rs 3480 crore in H1FY21. Generic segment grew 38.6% YoY to Rs 1777 crore. Custom synthesis grew 31.8% YoY to Rs 1409 crore. Carotenoids grew 14.0% YoY to Rs 294 crore. EBITDA margins expanded 777 bps YoY to 41.4% due to significantly better gross margin performance and lower other expenditure. Subsequently, EBITDA grew 64.2% YoY to Rs 1441 crore. Net profit grew 60.8% YoY to Rs 1012 crore in-line with a strong operational performance.

Outlook

We maintain BUY with a target price of Rs 4425 based on 40x FY23E EPS of Rs 110.6.

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