The 17 reports from 7 analysts offering long term price targets
for Divi's Laboratories Ltd. have an average target of 3523.50. The consensus estimate
represents a downside of -1.28%
from the last price of 3569.05.
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 ~| 3700 crore [| 1800 (existing plans) + | 400 (custom synthesis blocks) + | 1500 (greenfield Kakinada plant) crore], over and above ~| 2000 crore spent in last five years. Divi's remains a quintessential play on the Indian API/CRAMs segment with its product...
Corporate earnings in Q2FY21 came in better-than-expected wherein companies benefitted from low raw material cost and realised operating leverage benefits with management commentary positive on pace of demand recovery and retaining some part of operating leverage gains in the post Covid world. At the index level, excluding the BFSI space; net sales fell ~10% YoY, primarily driven by double digit topline decline in the oil & gas space. On the profitability front, EBITDA margins at the index level came in at a multi-quarter high at 18.9%, up...
Divi's Lab (DIVI) reported a strong beat on 2QFY21 earnings. This was led by healthy traction in Generics / Custom Synthesis (CS), coupled with lower raw material cost and better operating leverage. Interestingly, meaningful benefit is yet to accrue from the major capex phase. DIVI indicated an...
Divis Laboratories Limited (Divis) reported impressive numbers for yet another quarter with results ahead of estimates. A double digit growth in the API as well as custom Synthesis business drove the topline growth, while backward integration benefits and gross margin expansion drove the growth in operating margins, leading to a sturdy double digit earnings growth. Consolidated sales for the quarter stood at Rs. 1,749 crore, is up 21% y-o-y, due to 26% growth in API and 18% growth in custom synthesis business. OPM at 43.3% expanded sturdily by 933 bps y-o-y because of rise in gross margins and benefits of backward integration. Consequently, reported PAT at Rs. 519.6 crore was up 45.6% y-o-y and was ahead of estimates....
We value DIVI at 35x prospects for generic APIs, (b) its strong relationship with innovators, which is improving the scope of business in CRAMS (Contract Research And Manufacturing Services), and (c) capex support to meet the future requirements of customers. Accordingly, we arrive at TP of INR3,350 on a as we believe DIVI to be well-placed to benefit from renewed API as well as opportunity in CRAMS, supported by strong chemistry skill sets, manufacturing capacity/capabilities, and minimal The overall outlook for API manufacturers has improved on account of lower supplies from Chinese companies. We raise our EPS estimate by 16%/13% for FY21/FY22E to factor favorable demand for DIVIs APIs, margin enhancement owing to an increase in the in- house manufacturing of intermediates, and additional revenue from new capex. We expect a 33% earnings CAGR over FY2022E, led by increased business prospects from Custom Synthesis and Generics as well as ~600bp margin We value DIVI at 35x 12M forward earnings to arrive at TP of INR3,350.
Outlook and Valuation: We downgrade our revenue estimates for FY21E by 5.9% to Rs. 60.3 bn dueto downgrade in Customs Synthesis and Generics business due to no revenueguidance provided by the management.
Outlook and Valuation: We downgrade our revenue estimates for FY21E by 5.9% to Rs. 60.3 bn due to downgrade in Customs Synthesis and Generics business due to no revenue guidance provided by the management.
Divis Laboratories (Divis) consolidated sales for Q4FY2020 grew by 9.7% y-o-y to Rs. 1,389 crore and were largely in line with estimates. Both the generic and custom synthesis business revenues grew in double digits. Gross margins were up 160 bps y-o-y to 62.9% aided by improved realisations, due to firmed up API prices and low raw material costs. Due to a surge in employee costs and higher other expenses, operating margins contracted 140 bps y-o-y to 32%. Operating profits at Rs 444.5 crore, grew 4.9% y-o-y and were below estimates of Rs 478 crore. The company reported a forex gain of Rs. 57 crore as against Rs. 7 crore forex loss reported in the...
However, DIVI is well placed to benefit from the CRAMS opportunity due to its strong chemistry skillset as We reduce our earnings estimate by 8%/3% for FY20/FY21E to factor in the COVID led headwinds on the business over the near term. We reduce our earnings estimate by 8%/3% for FY20/FY21 to factor in the delay We expect 25% earnings CAGR over FY20-22E, led by increased business prospects from custom synthesis as well as the generics segment. We continue to value DIVI at 26x 12-month forward earnings to arrive at price target of INR2,245. However, outlook remains intact in terms of opportunities post the We reduce our earnings estimate by 8%/3% for FY20/FY21E to factor in the COVID- 19 led headwinds on the business over the near term. We value DIVI at 26x 12- month forward earnings to arrive at a price target of INR2,245.
Divi's Labs (DIVI) saw a steep 19% EBITDA miss as high gross margins (+200bps QoQ) were negated by staff/SGA cost, leading to subpar Q4 operating margins.
On the business front, despite the nationwide lockdown, domestic growth is expected to remain more or less stable. Exports growth, barring for one or two months due to congestion in all major ports globally, is also expected to remain strong due to 1) currency benefit, 2) slowdown in competition due to delay in new approvals that will be beneficial for existing players and 3) expected demand continuum across the world despite Covid-19. Some windfall is also expected in some critical productsa case in point is Hydroxychloroquine, a malaria drug that is likely to be repurposed as a prophylaxis for Covid-19 treatment in some cases....
5 February 2020 DIVI is almost at the end of significant capacity expansion worth INR17b to cater to the increasing generics business and innovators increased outsourcing. Lower Nutraceutical sales impacted DIVIs 3QFY20 performance; however, we believe that the company is well positioned to benefit from the CRAMS opportunity over the next 4-5 years. We reduce our EPS estimate by 3%/2% for FY20/FY21E, primarily to factor in the reduction in Nutraceutical sales and the higher opex related to compliance. 3QFY20 sales grew a marginal 2.7% YoY to INR14b (v/s est. Gross margin shrank 440bp YoY to 60.8%, largely due to inferior product mix and higher raw material cost. EBITDA margin contracted at lower rate of 380bp YoY to 35.4%.
The custom synthesis (CS) business (42% of FY19 revenues) is a margin accretive business but at times lumpy as it depends on offtake from customers (global top 20 big pharma). However, this business has shown a good recovery on account of an improved business environment. Strong R&D; capabilities and India cost arbitrage along with IP adherence are some legacy strengths, which will drive incremental assignments from MNCs. We...
the product mix with a shift toward generics (59% v/s 57% YoY) and increased RM cost led to gross margin contraction of 390bp YoY to 59%. DIVI incurred non-recurring operational expense of INR200m related to power & fuel, consultancy and other regulatory costs. Adjusting for this, the EBITDA margin shrank 410bp YoY to 35.3% (our estimate: 34.2%). Accordingly, EBITDA declined 2% YoY to INR5.1b (our estimate: INR4.6b). DIVI had a forex gain of INR132m for the quarter. Adjusting for the same, PAT was down marginally by 1% YoY to INR3.6b (our estimate: INR3.4b). For 1HFY20, sales/...
