Divi's Labs stock gains after BofA raises target price

Shares of Divi's Laboratories gained in Wednesday's trade after global brokerage BofA upgraded the stock.

At close, shares of Divi's Laboratories traded 1.65 per cent or Rs 59.65 higher, at Rs 3,681 apiece on the BSE. The market capitalisation of the company at around the same time stood at Rs 97,718.98 crore.

BofA gave an 'underperform' rating to the stock and increased the target from Rs 3,380 to Rs 4,025 apiece. As per the brokerage, the company's earnings downgrade cycle and decline in margins, which were affected by Active Pharmaceutical Ingredient (API) pricing pressure, will see a reversal. 

The brokerage expects margins to reach 33 per cent in FY26 and estimates earnings compound annual growth rate (CAGR) at 35 per cent.  

New launches and ramp-ups of Kakinada's API manufacturing facilities will support growth. The valuation seems cheaper than peers, BofA notes, as the stock is trading at 35.5x FY26 P/E. 

Divi's Laboratories Q3 results 

Pharma major Divi's Laboratories reported a 17 per cent increase in its consolidated net profit to Rs 358 crore for the October-December quarter of the current financial year compared to the corresponding figure of Rs 306 crore in the same period of the previous year.

The company's total revenue for the third quarter was 8.6 per cent higher at Rs 1,855 crore compared to the same period last year.

The pharma firm's earnings before interest, taxes, depreciation, and amortisation (EBITDA) worked out to Rs 479 crore, which was 19.6 per cent higher than Rs 409 crore reported for the same period of the previous year. The EBITDA margin also rose to 26.4 per cent from 24 per cent year-on-year.

Divi's Laboratories share price: Past performance 

In a year, Divi's Laboratories shares gained over 28 per cent. The Nifty50 index has also risen over 28 per cent during the period. 

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