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Systematix Report
Divi's Laboratories Ltd.'s reported Q3 FY26 revenues (Rs 2,604 crore, up 12% YoY) , Ebitda (Rs 890 crore up 20% YoY) and PAT after exceptional items was (Rs 853 crore, flattish YoY). The performance was in line with consensus expectations. Gross margins expanded 300+bps YoY and QoQ led by favorable currency and a better business mix.
Custom Synthesis grew 20% YoY, while generics business was flat. The custom synthesis business is poised for sustained growth as Divi's continues with aggressive capacity expansion.
The capital work in progress currently stands at Rs 2,394 crore (30% of the Gross Block). While there is certain patent expiries expected to impact Divi's custom synthesis business revenue, but new launches in the same segment should more than offset.
They maintain their guidance around maintaining double digit growth trajectory.
The brokerage marginally changes its estimates and roll over to FY28E earnings per share. Accordingly estimate revenue /Ebitda / EPS CAGR of 14% / 16% / 17% respectively. Systematix revises target price to Rs 6,564 (50x FY28E EPS) and upgrade the stock to Hold rating.
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