Home >Markets >Stock Markets >109% up in one year, ICICI Sec sees further 15% upside in this pharma stock

Established in the year 1990, Divi’s is a leading manufacturer of Active Pharmaceutical Ingredients offering high quality products to over 95 countries. The stock's last closing price was 3,848 on Friday. The stock has already doubled in the last one year. Analysts at ICICI Securities see a further upside of 15% in the stock. The brokerage has set a price target of 4,425 with a target period of 12 months for Divi's Laboratories.

"More than strong half-yearly performance (the management stresses that in a business like this can be lumpy) important narrative for Divi’s is unprecedented capex to further augment capacities besides preparing for growing opportunities arising due to China plus one factor. It has earmarked an aggressive capex of approx. 3,700 crore [ 1800 (existing plans) + 400 (custom synthesis blocks) + 1,500 (greenfield Kakinada plant) crore], over and above ~ 2,000 crore spent in last five years," says ICICI Securities.

Divi’s remains a quintessential play on the Indian API/CRAMs segment with its product offerings and execution prowess, adds the brokerage.

Revenues grew 33.4% YoY to 3,80 crore in H1FY21. Generic segment grew 38.6% YoY to 1,777 crore. Custom synthesis grew 31.8% YoY to 1,409 crore. Carotenoids grew 14.0% YoY to 294 crore. EBITDA margins expanded 777 bps YoY to 41.4% due to significantly better gross margin performance and lower other expenditure. Subsequently, EBITDA grew 64.2% YoY to 1,441 crore. Net profit grew 60.8% YoY to 1,012 crore inline with a strong operational performance.

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