Shares of Divi’s Laboratories Ltd surged by nearly 5% to ₹6,152.60 in Tuesday’s session following its impressive Q3 performance and positive brokerage updates. Citi reaffirmed its ‘Buy’ rating on Divi’s, maintaining it as a top pick with a target price of ₹6,850. The company’s robust 25% YoY revenue growth and 52% YoY rise in EBITDA drove optimism, supported by strong momentum in custom synthesis, generics, and contrast media segments.
Citi’s Key Takeaways:
- The company’s focus on the GLP-1 peptide market and backward integration is a major growth driver.
- Ongoing collaborations with MNCs and product development in custom synthesis signal long-term potential.
- Divi’s diversified portfolio and capabilities in complex molecules position it for sustained growth.
Meanwhile, Jefferies reiterated its ‘Hold’ rating with a target price of ₹6,280, citing a mixed performance. The brokerage highlighted Divi’s custom synthesis growth and Gx segment recovery amid pricing pressures but pointed out potential product concentration risks with Sacubitril Valsartan in FY27.
The drugmaker reported a 64% year-on-year rise in net profit at ₹589 crore for the December quarter, surpassing CNBC-TV18’s estimate of ₹507 crore. Revenue from operations stood at ₹2,319 crore, marking a 25% increase from ₹1,855 crore in the year-ago period.
Key Financial Highlights (Q3FY25):
- Net Profit: ₹589 crore, up 64% YoY and 15% sequentially.
- Revenue: ₹2,319 crore, up 25% YoY but marginally lower by 0.80% QoQ.
- Ebitda and Profit Beat: Ebitda and profit after tax outperformed consensus by 8% and 18%, respectively.
The strong results were primarily attributed to the robust performance in the custom synthesis (CS) segment, which offset pricing pressures in the generics business. The management remains optimistic about the market stabilizing, with expectations of a cyclical upturn in the upcoming quarters.
