Divi's Labs Q3 Review: Custom Synthesis Drives Earnings; Generics Stable — Motilal Oswal Retains 'Neutral'

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Divi’s Laboratories Ltd. delivered in-line revenue. However, it reported better-than-expected Ebitda/PAT led by a better product mix and lower tax rate (due to the shift to a new tax regime). The custom synthesis business continues to improve for eight quarters now. The generics business has been gradually witnessing stability on a QoQ basis.

We broadly maintain our estimates for FY25/FY26/FY27. We value Divi's at 50 times 12 months forward earnings to arrive at our target price of Rs 6,200. We expect a 25% earnings CAGR over FY25-27, driven by improved capacity utilization at Kakinada and healthy traction across key segments.

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