Divi's Laboratories Ltd. remains Citi's top pick in the Indian pharmaceutical space, with the brokerage reiterating its 'Buy' rating and a target price of Rs 9,450, on the back of a strong growth runway led by its peptide pipeline and improving commercial visibility.
According to Citi analyst Vivek Agrawal, the next 12-15 months could prove crucial for Divi's as several new products move towards commercialisation, strengthening earnings visibility over the medium term.
The brokerage expects supplies for GLP-1 molecules to begin in FY27, while two key oral peptide opportunities – Enlicitide and Icotrokinra – could start contributing from calendar year 2027. Citi believes both products represent sizable long-term opportunities and could significantly expand Divi's custom synthesis business.
The brokerage estimates Enlicitide and Icotrokinra together could contribute $400-600 million in annual revenue at peak over the next three to five years. While the addressable patient pool for these therapies may be smaller than GLP-1 drugs, Citi noted that their considerably higher API intensity could still translate into meaningful peptide demand.
Citi also believes investor concerns around Entresto are exaggerated. It said Divi's planned capacity expansion indicates the company aims to become a global volume leader in the API, while scale efficiencies and in-house sourcing should support pricing flexibility. The brokerage added that even if Europe witnesses a sharper-than-expected decline, the impact on Divi's overall financials is likely to remain limited.
Beyond peptides, Citi highlighted Divi's broader custom synthesis pipeline as another key growth driver. Multiple products are expected to transition to commercial-scale volumes over the next 12 months, providing stronger revenue visibility.
On valuations, Citi said it values Divi's at 40 times its estimated March 2028 EBITDA to arrive at its target price of Rs 9,450. The brokerage believes premium valuations remain justified given favourable sector tailwinds, the company's entry into the GLP-1 segment and its long-term growth visibility.
Despite these strengths, Citi noted that Divi's continues to trade at a discount to several smaller Indian CDMO companies despite offering superior long-term pipeline visibility.
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