Divi’s Laboratories Ltd is a large cap company in the pharmaceutical industry with a market valuation of 98,972.00 crores. Leading Active Pharmaceutical Ingredients (API) manufacturer Divi exports top products to more than 95 countries. Divi’s also achieved the feat of being one of the top three API producers worldwide and one of the top API companies in Hyderabad. According to data from Value Research, Divi’s laboratories are currently debt-free, which may be of interest to investors. However, what makes Divi’s Laboratories more interesting is that it’s a great example of a stock that has made investors millionaires over the past 19 years.
Divi’s Laboratories Share Price History
Shares of Divi’s Laboratories Ltd ended trading on Friday 3,721.10 per share, down 5.75% from previous close 3,948.05. share price increased 9 on March 13, 2003, to the level it is now, represents a multibagger return and represents an all-time high of 41,245.56%. If a person had invested 1 lakh in the shares of Divi’s Laboratories 19 years ago, at present the price will be around 4.13 crores. share price has gone up 635.20 represents a multibagger return of 485.82% at the current price level during the last five years, as of Aug 18, 2017.
However, in the last 1 year, the stock has fallen 24.04% and on YTD basis, the stock has fallen 20.00% so far in 2022. On NSE, the stock had touched a 52-week high. 5,425.10 on 18-Oct-2021 and 52-week low of 3,365.55 on 26-May-2022 which means at current price level 3,721.10 shares are trading 31.40% down from 52-week high and 10.56% up from 52-week low.
Divi’s Laboratories Q1FY23 Results
Divi’s Laboratories has earned a total income of 2343 crore in Q1FY23 on consolidated basis as compared to Rs. 1997 crore for the same quarter of the previous year, an annual increase of 17.32%. On a consolidated basis, the company has reported Profit Before Tax (PBT) of 851 crore against a PBT of Rs. 814 crore for the corresponding quarter of the previous year, a year-on-year increase of 4.54%. Company earned profit after tax (PAT) 702 crore on a consolidated basis for the current quarter 557 crores for the same quarter of the previous year, a year-on-year growth of 26.03%.
Amount of Foreign Exchange Gains for the current quarter, on a consolidated basis 56 crore as against profit of 20 crore in Q1FY22. In addition, the company’s total revenue grew by 15.50% y-o-y. 2294 crore in Q1FY23. From 1986 Cr on a standalone basis in Q1FY22. Firm has filed PBT of 844 crore on standalone basis, up from 814 crore in Q1FY22, representing a year-on-year growth of 3.68%. Firm has filed PAT of 692 crore on standalone basis, up from 552 crore in Q1FY22, representing a year-on-year growth of 25.36%.
Should you buy shares of Divi’s Laboratories?
Research analysts at broking firm Sharekhan said in a note that “Divis Laboratories (Diviz) Q1FY23 results were a mixed bag and reflected higher operating cost while lower tax rate resulted in double-digit PAT growth. Benefit from expanded capabilities.” Revenues grew strongly in double digits due to lower tax rate, PAT also up in double digits. Results missed estimates. Management’s remarks pointed to healthy demand, supported by capacity expansion plans, which the company While the management expects higher cost pressures going forward as overall costs including raw material, freight cost and power cost will continue to grow at higher levels, this will impact performance in subsequent quarters. However, Divis has implemented cost control measures in the form of backward integration and removal of bottlenecks to existing facilities and these may work in the medium to long term.”
“The growth prospects for Divis’ business remain bright and will drive growth over the long term,” he said. Installed efficiencies, backward integration, a focus on quality, and the benefits of scale coupled with major capacity expansion plans, are positives that can support growth. However, given the cost headwinds, including higher raw material costs, freight costs and power costs, performance could take a toll on the near term. In the CMP, the stock trades at a valuation of 36.7x/31.9x its FY23E/FY24E EPS respectively, while there are clear near-term concerns, long-term growth levers remain intact, so we maintain a buy recommendation on the stock. modified pt. 4450,” said research analysts at broking firm Sharekhan.
Research analysts at broking firm ICICI Securities said, “The share price of Divi has risen ~2.3x in the last three years. Maintain the BUY as the company is a compelling bet as a structurally well positioned custom synthesis and API company. remains, even after a potentially flat year on a higher basis in FY22, while some near-term margin pressure is transitory in nature. 4315 ie 38x P/E on FY24E EPS 113.5.”
The company is building capacity in some more specialized APIs as per the evolving demand scenario in the backdrop of ‘China Plus One’ opportunities and the upcoming opportunity size of ~US$20 billion in molecules to be off-patented in FY 2013-25, Six identified growth areas to progress – 1) Established Generics, 2) Existing Generics, 3) New Generics, 4) Sartan API, 5) Contrast Media, 6) CS, Commercialization of New APIs and Multipurpose Facility for Custom Synthesis and Progress on 1 DMF Filing and 2) Progress on Contrast Media API and Kakinada Greenfield Project (Planned Outlay 1000-2000 crores) are the key triggers for the future price performance of Divi’s laboratories, according to research analysts at broking firm ICICI Securities.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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