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Systematix Report
The brokerage firm Systematix has made a modest changes to its earnings estimates to factor in Divi's Laboratories Ltd.'s Q1 performance. However, the brokerage has maintained its Hold rating with a target price of Rs 7,959 (50 times FY28E earnings per share) as the sharp run-up in the stock largely reflects the improving business outlook, limiting meaningful upside from current levels.
The brokerage estimate FY26-28E revenue/Ebitda/EPS CAGR of 19%/31%/32% respectively.
Divi's Laboratories revenue of Rs 30,800 million grew 28% YoY, significantly ahead of the brokerage's estimate by 11% and consensus expectations by 12%.
The beat was primarily driven by the Custom Synthesis (CCS) business, which grew 46% YoY versus our expectation of 20%, aided by robust execution across commercial molecules, higher contribution from commercial manufacturing programs and a favourable product mix.
The Generics business (10% YoY vs estimate of 12%) marginally underperformed due to continued pricing pressure, while Nutraceuticals (19% YoY vs 10% estimate) delivered a stronger-than-expected performance, supported by healthy global demand and continued portfolio expansion.
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