ICICI Direct recommended hold rating on Divi's Laboratories with a target price of Rs 1640 in its research report dated August 12, 2019.
ICICI Direct's research report on Divi's Laboratories
Q1FY20 revenues grew 16.8% YoY to Rs 1162.9 crore (I-direct estimate: Rs 1318.4 crore), driven by strong growth in generic segment. EBITDA margins fell 206 bps to 33.3% (I-direct estimate of 36.8%) mainly due to higher other expenditure. EBITDA grew 10% YoY to Rs 387.1 crore (I-direct estimate: Rs 484.5 crore). Net profit grew 2.4% to Rs 272.4 crore (I-direct estimate: Rs 350.2 crore) mainly due to a below expected operational performance.
Margins are also likely to get support from extensive backward integration, product mix and operating leverage. We ascribe a target price of Rs 1640 based on 26x FY21E EPS of Rs 63.1.
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