Divi's Laboratories Gets 'Buy' Upgrade From HSBC On Strong Growth Prospects — Check Target Price
The upgrade from 'reduce' to 'buy' is based on a more optimistic view of the company's custom synthesis segment.
HSBC Global Research has upgraded Divi's Laboratories Ltd. to 'buy' rating, citing promising growth trajectory driven by its involvement in the production of anti-diabetes drug tirzepatide, other peptides, and contrast media. The target price has been raised to Rs 7,900 from Rs 5,020, reflecting a 14.4% upside potential.
HSBC highlighted the revenue potential for Divi's Laboratories, projecting approximately $450 million from peptides and $260 million from contrast media by 2030.
The upgrade from 'reduce' to 'buy' is based on a more optimistic view of the company's custom synthesis segment. "The market is positive about Divi's being one of the global suppliers of peptide fragments used in Eli Lilly's anti-obesity and anti-diabetes drug tirzepatide," the analysts explained.
They also pointed out multiple growth drivers, including the scale-up in supply for tirzepatide fragments, a diversified client base for peptides, and increased supplies for contrast media.
HSBC's analysis indicates that peptides accounted for $18-20 million of revenue in FY25, representing about 3.3% of CS revenue. Analysts expect a notable increase in revenue from peptides, driven by rising supplies of tirzepatide and protected amino acids. "With rising capabilities, Divi's should win contracts for API supplies at clinical trials and commercial scale," they added.
The report also highlighted the risks associated with Divi's growth prospects, including the potential entry of generics in Entresto and possible disruptions in supplies for tirzepatide once Eli Lilly completes its API capacity expansion in 2026.
