Divi's Labs has been fortifying its growth drivers in custom synthesis through its focus on subsegments, such as peptides and contrast media. It is also adding newer molecules in the generics space.
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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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