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What should investors do with Divis Laboratories post Q4 results: buy, sell or hold?

The company's consolidated profit increased to Rs 502.02 crore in Q4FY21 from Rs 388.23 crore in the corresponding quarter of the last fiscal.

May 31, 2021 / 10:16 AM IST
 
 
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Divis Laboratories touched a 52-week high of Rs 4,284.05, rising 4 percent intraday on May 31 after the company reported a healthy double-digit growth in earnings as its consolidated profit increased to Rs 502.02 crore in Q4FY21 from Rs 388.23 crore in the corresponding quarter of the last fiscal.

At the operating level, EBITDA (earnings before interest, tax, depreciation and amortisation) increased 61.2 percent to Rs 716.26 crore and margin improved 807 bps to 40.05 percent compared to the year-ago period, the leading APl manufacturer said on May 29 while sharing the March quarter numbers.

Also read: Divis Labs Q4 profit jumps 29% to Rs 502 crore on strong operating income, margin

Here is what brokerages have to say about the stock and the company after the March quarter earnings announcement:

Jefferies | Rating: Buy | Target: Raised to Rs 4,732

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The EBITDA was impacted by COVID incentive payments of Rs 34 crore. It’s operationalised Rs 180 crore capex of the total Rs 250 crore incurred since 2018.

Goldman Sachs | Rating: Buy | Target: Raised to Rs 4,530 from Rs 4,440

The quarter was a beat with multiple drivers to support business in FY22. The market share gained on molecules like Carbidopa, Levodopa, Valsartan, Mesalamine.

There is an additional supply opportunity for Molnuparivir API to Indian companies. The company is preparing to raise market share in contrast-media APIs.

Motilal Oswal | Rating: Buy | Target: Rs 4,850

We raise our FY22E/FY23E EPS estimates by 4 percent each to factor in a better business outlook in CS as well as the generics segment and ost reduction on account of technology upgradation.

We expect a 32 percent earnings CAGR over FY21-23E, led by increased business prospects from CS and generics, improved growth in nutraceuticals, new product additions over the near term, as well as around 180bp margin expansion on the process and productivity improvements.

Sharekhan | Rating: Buy | Target: Rs 4,810

Given the better-than-estimated results for Q4FY2021, we have revised upwards our earnings estimates for FY2022E/FY2023E by 3 percent and 6 percent, respectively. At the CMP, the stock trades at rich valuations of 41.2x/31.7x its FY2022E/ FY2023E EPS, respectively and given the strong growth prospects, we expect rich valuations to sustain.

At 0950 hours, Divis Laboratories was quoting at Rs 4,250.95, up Rs 134.45, or 3.27 percent, on the BSE.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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Moneycontrol News
first published: May 31, 2021 10:16 am
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