Motilal Oswal Financial Services (MOSL) has retained its ‘Neutral’ rating on Divi’s Laboratories, revising the target price to ₹6,320 from ₹7,045, citing pressure in the generics segment and elevated operational expenses from new projects.
Custom synthesis strong, but profitability impacted by new capex
The brokerage noted that custom synthesis (CS) momentum remains intact, continuing to be a key growth driver. However, the generics business is facing headwinds, and high opex from recent projects is weighing on profitability.
MOSL has cut its earnings estimates by 8% for FY26 and 6% for FY27, reflecting cost pressures and subdued performance in parts of the business.
Revenue to pick up in later years; 20% earnings CAGR seen
While current challenges persist, MOSL highlighted that revenue growth is expected to be back-ended, with a stronger trajectory likely emerging in the latter part of the forecast period. The brokerage continues to model a 20% earnings CAGR for FY25–27, underpinned by scale-up in CS and new project contributions.
Disclaimer: The views expressed in this article are those of the brokerage firm and do not constitute investment advice. Investors are advised to consult their financial advisors before making any investment decisions.
