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Divi's Lab share price rises after strong Q3 results. Should you buy?

Stock Market Today: Divi's Lab has reported net profit of  ₹902.20 crore in Q3FY22, which is around 92 per cent higher from its net profit of  ₹470.60 crore in Q3FY22. (REUTERS)Premium
Stock Market Today: Divi's Lab has reported net profit of 902.20 crore in Q3FY22, which is around 92 per cent higher from its net profit of 470.60 crore in Q3FY22. (REUTERS)

  • Divi's Lab share price: Divi's Lab results for Q3 FY22 are better than the market expectations and its Q4 results are expected to come further better as the company may benefit from the US ban on contract research and manufacturing imports from Chinese companies, believe stock market experts

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Stock market today: Shares of Divi's Lab shot up after the announcement of strong Divi's Laboratories Q3 FY2021-22 results. Following weakness in the Indian stock market on disappointing US inflation data, Divi's Lab share price today opened flat and went on to hit intraday low of 4,240.05 per share levels. But, after the announcement of strong Q3FY22 results, Divi's Lab shares attracted Bull's interest and pare losses incurred in early morning deals. The pharma stock went on to ascend its intraday high of 4,474 apiece levels, appreciating around 4 per cent from its yesterday's close of 4,313 on NSE.

According to stock market experts, Divi's Lab share price has strong support at 4200 and this support is expected to remain maintained. They said that Divi's Lab Q3 results are better than the market expectations and its Q4 results are expected to come better as the company may benefit of US ban on contract research and manufacturing imports from Chinese companies. They said that the company is getting benefit of rise in API demand in the international market as it ha strong API business model as well.

Speaking on the reason for rise in Divi's Lab share price; Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Company has reported strong Q3 results beating the market estimates by huge margin. It has reported around 92 per cent year-on-year rise in net profit, which enhanced the buyers’ interest in the stock. However, the stock is expected to give better numbers in Q4 FY22 as well because it will one of the major beneficiaries of the recent US ban on contract research and manufacturing imports from Chinese companies. But, more clarity on the company's guidance and margins will become clear after the company's commentary post-results. So, this rise may not last long as Bulls are expected to book profit ahead of the company's commentary."

Advising positional investors to add Divi's Lab shares in their portfolio; Sumeet Bagadia, Executive Director at Choice Broking said, "Divi's Lab shares have strong support at 4200 whereas it has strong hurdle at 4600. The stock has depreciated near 20 per cent after ascending to its life-time high of 5425.10 levels in October 2021. It may go up to 4500 to 4600 apiece levels in next 15 to 20 days." However, he advised investors to maintain strict stop loss below 4200 levels.

Advising positional investors to wait for the company's commentary, Avinash Gorakshkar of Profitmart said that Divi's Lab is a debt-free company and its commentary is also expected to fuel Bull's conviction. But, a positional investor should wait for the commentary as the stock may go 15 to 20 per cent higher post-commentary in next 6-9 months.

Divi's Lab Q3FY22 results

The pharma company has reported net profit of 902.20 crore in Q3FY22, which is around 92 per cent higher from its net profit of 470.60 crore in Q3FY22. In this period, company's revenue also went up 46.50 per cent at 2493.20 crore. Company's margins have improved 3.40 per cent whereas its EBITDA has surged 58.7 per cent in the same period.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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