Divi's Laboratories reported a 64.5% year-on-year increase in consolidated net profit for the fiscal third quarter ending December (Q3FY25), reaching ₹589 crore, compared to ₹358 crore in the same quarter last year. Sequentially, the profit rose by 15.5%.
Analysts View
According to Jefferies India Ltd, post-results, the custom synthesis business continued to propel growth, albeit concerns have been raised regarding the need to improve product concentration. They noted that Divi's Q3 revenue was in line with their expectations, while EBITDA came in above estimates owing to a favorable product mix; further, the custom synthesis business continued to drive growth during the quarter, albeit recovery was also seen in the generics business. Although generics pricing remains under pressure, this was offset by higher volumes. Divi's remains optimistic about its GLP-1 opportunities, which span three business segments from a manufacturing perspective. However, Jefferies noted that the company will need to address the high product concentration of Sacubitril Valsartan by FY27. As a result, they maintain a "Hold" rating with a price target of ₹6,280.
Motilal Oswal Financial Services noted that Divi's Laboratories is strengthening its growth drivers in Custom Synthesis by focusing on subsegments like peptides and contrast media, while also introducing new molecules in the generics space. The company is building additional capacity to meet future customer needs. With a cash reserve of nearly ₹3,600 crore, Divi's has ample flexibility to fund projects if necessary. However, given the current valuation, MOFSL sees limited upside potential from current levels and has maintained a "Neutral" rating.
