Divi's Labs - Value Play Among API Exports Players; DRChoksey Initiates Coverage With 'Accumulate'

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..DRChoksey Research Report.We believe Divi’s Laboratories Ltd. has strong growth engines ahead to augment its growth and profitability over FY23-FY26E. During FY22-FY24E, it has been validating existing generic contrast media active pharma ingredients and Sartan products with new set of potential customers as well as novel MRI API with innovator pharma company. We believe the company has excess capacity created for custom synthesis of Covid-19 products during FY19-FY21. Although the company points, it can use the capacity interoperably, we believe the same will take time to be replaced or used by other products, especially when many of them are in the pipeline before getting scaled up for commercial scale production. Hence, we assume the asset turn ratio to be in line with FY23 for FY25E and FY26E. We also believe that Kakinada can become meaningful only by FY26E-FY27E. We believe with the recent ramp up in generic APIs for contrast media, Sartan products, two of the custom synthesis projects and consistent growth in the core API generics segment, the company should be able to enhance its profitability over FY23-FY26E. .We expect Divi's Labs to grow the revenue and earnings at 9.0% and 28.0% compound annual growth rate, respectively over FY24E-FY26E. The stock has traded historically at a one-year forward price-to-earning of 47.5 times during its peak profitable years during FY21-FY22. Currently, it is trading at 52.7 times/61.0 times/45.8 times/37.4 times its FY23/FY24E/FY25E/FY26E earnings per share. We value it at 40.6 times its FY26E EPS of Rs 96.8 and arrive at a target price of Rs 3,931. We initiate coverage on Divi's Labs with an Accumulate rating as target price implies a 9% upside from current levels..Click on the attachment to read the full report:.Axis Bank Versus ICICI Bank - Revisiting Performance Gap Over Recent Years: Motilal Oswal Analysis.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Divi's Labs - Value Play Among API Exports Players; DRChoksey Initiates Coverage With 'Accumulate'

Initiate coverage on Divi's Labs with an Accumulate rating as target price implies a 9% upside from current levels.

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Divi's Labs - Value Play Among API Exports Players; DRChoksey Initiates Coverage With 'Accumulate'

Initiate coverage on Divi's Labs with an Accumulate rating as target price implies a 9% upside from current levels.

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