Hold Divi's Laboratories; target of Rs 4930: KR Choksey

hold

KR Choksey's research report on Divi's Laboratories

DIVISLAB continues to post results below estimates due to continued weakness in generic pricing. We hence cut down our EPS estimates by 3% each for FY25E/FY26E. As the company expects to maintain a 50:50 ratio between custom synthesis and generic APIs, going forward, we raise FY25E revenue marginally by 1% and cut down FY26E revenue estimate by 8%.

Outlook

The stock is trading at 63.5x/52.9x its FY25E/FY26E EPS. We raise the valuation multiple by 20% to 54.0x (earlier 45.0x) on FY26E EPS of INR 91.3 (earlier INR 99.5) and arrive at a revised TP of INR 4,930 (earlier INR 4,478). Given a 2.1% upside from its CMP we maintain HOLD on DIVISLAB.

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Divi's Laboratories - 070824 - kr