Hold Divi's Laboratories; target of Rs 3685: ICICI Direct

ICICI Direct's research report on Divi's Laboratories

Divi’s is engaged in manufacturing generic APIs and intermediates, custom synthesis (CS) of active ingredients and advanced intermediates for pharma MNCs, other speciality chemicals like Carotenoids and complex compounds like peptides and Nucleotide revenues. In CS, the company maintains a strong relationship with global big pharma players while in generics it enjoys significant market share in products like Naproxen, Dextromethorphan and Gabapentin among others • Divi’s is fully backward integrated in products with high market share. The management intends to follow suit in other products.

Outlook

Downgrade from BUY to HOLD as we keep tab on future custom synthesis ex-Covid opportunities and execution besides steady generics traction. Valued at Rs 3685 i.e. 38x FY24E EPS of Rs 96.9.