Divi's Labs Shares In Focus As Jefferies Upgrades To 'Buy', Eyes 16% Upside On Sustained Growth Momentum

Divi's Laboratories Ltd. share price will be in focus on Aug. 25 after global brokerage Jefferies upgraded the stock to 'Buy' as it expects that growth momentum will continue. Custom synthesis segment and new launches will support the pharma major's growth. The brokerage has given a target price of Rs 7,150 apiece, which implied 16.18% upside from Friday's close.

Divi's Laboratories' custom synthesis segment has clocked strong year-on-year growth of 19% in the financial year 2025. Sacubitril Valsartan has led the growth in this segment, according to Jefferies. This growth revival came after ups and downs saga of Molnupiravir.

However, custom synthesis segment may face near-term volatility because of the launch of Entresto generics in the US, but will be able to navigate a strong 16% CAGR during financial year 2025 and 2028, led by new molecule launches on the back of the GLP-1/China plus one strategies, strong big pharma relationship, and large-scale manufacturing capabilities, Jefferies said.

The brokerage believes that Divi's Laboratories is the key company to benefit from countries adapting China-plus-one strategy because it has largest manufacturing capacity of 16,500 kilolitres. Out of this total capacity, 15,000 KL is US Food And Drug Administration compliant with the rest is going under inspection in next tow years.

According to Jefferies, Divi's Laboratories has good molecules pipeline from the likes of Eli Lily, Novartis, BMS, AbbVi, and Pfizer. The list has likely grown stronger because of the China-plus-one strategy.

Divi's Laboratories' generic division has started to hit the growth curve since second half of the financial year 2025. New product launches and existing products will help Divi's Laboratories clock a double-digit growth, Jefferies said.

Moreover, the pharmaceutical company has a proven track record of acquiring big contracts. Jefferies is estimating that Divi's Laboratories' sales and Ebitda will grow 14 and 20% CAGR, respectively during financial year 2025 and 2028.