Earnings will see some impact if Divi's Unit 2 does not get cleared by USFDA: Analyst

The ongoing re-inspection at Unit 2 of Divi's Laboratories remains in focus. In an interview to CNBC-TV18, Amey Chalke of HDFC Securities shared his expectations.

United States Food and Drug Administration (USFDA) inspection on Divi's Vizag unit is crucial. We will have to upgrade our earnings estimate by 15-20 percent, he said.

See 15 percent earnings impact in case Unit 1 and Unit 2 are cleared and the stock would move up to Rs 1,000 levels, he added.

However, if it does not go in Divi’s favour then it can again come back to Rs 650 levels. So it is better to wait and get more clarity on how the inspection has happened, said Chalke.

If Unit 2 does not get cleared or it receives severe 483 observations then there would be some impact on earnings as well, he further mentioned.

We are not assuming any negative impact. We are neutral on the stock at this point of time and the price target is around Rs 700 assuming no clearance by US FDA, he said.