The shares of Divi’s Laboratories are one of the multibagger stocks offered by the Indian stock market over the years. Despite the selloff of this pharma stock since last one year, this multibagger stock has given almost 400 per cent return to its shareholders in last 5 years. During this the stock has risen from around from 700 3,460 each level. However, it Multibagger Pharma Stock It has remained sideways for the past three months and Prabhudas Lilladher believes the stock may go up The level of 4,140, over the long term, gives around 20 per cent returns to its investors.
The brokerage said, “Divi’s Laboratories (DIVI) posted healthy revenue growth, however profitability was impacted due to change in product mix as well as higher COGS and overheads. We believe that backward integration, debottlenecking and Utility upgradation efforts will lead to better margins.”
On positive from Q1FY23 results for the pharma stock, Prabhudas Lilladher’s report said, “Divi’s Q1FY23 sales grew 15% YoY (down 11% QoQ) to 22.5bn, largely in line with our estimates. This was aided by an increase in Custom Synthesis.(CS) (+22% YoY), although QoQ CS sales decreased 69% as sales of molnupiravir decreased.EU and US revenues during Q1FY23 The product mix for generics and custom synthesis was 47% in Q1FY23 and 53% of revenue, respectively, at Nutraceutical business for the quarter. 1.86bn with 35% YoY growth. Generic posted moderate 4% year-on-year growth after four quarters of decline.”
On key information from the company’s guidance following the announcement of Q1FY23 results, the brokerage report said, “Capacity expansion of key commercial APIs has been completed and the qualification process is progressing well. New multi-purpose facility for custom synthesis of projects.” Verification. The company continues to experience price increases in RM and solvent prices along with higher shipping and power costs.”
The brokerage further said that the company is operating at 80-85% of the capacity utilization and there is still huge capacity available for future additional demand. During Q1, While 87 crores has been capitalized 5.1bn has been subject to WIP. As of June 2022, net cash is Rs 34 billion (6) The company has the ability to overcome any raw material volatility with new contracts.
On his suggestion to positional investors with regard to this Multibagger Pharma stock, Prabhudas Lilladher’s report states, “We recommend our ‘accumulate’ rating with a revised TP. 4,140 per share.” Divi’s Labs share price is up around today 3,460 This means the brokerage is expecting a rally of around 20 per cent as its long-term target is now 4,140 per share.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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