Last Updated : Jun 10, 2020 08:23 AM IST | Source: Moneycontrol.com

Hold Divi's Laboratories; target of Rs 2355: ICICI Direct

ICICI Direct recommended hold rating on Divi's Laboratories with a target price of Rs 2355 in its research report dated June 09, 2020.

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ICICI Direct's research report on Divi's Laboratories

Q4FY20 revenues grew 10.6% YoY to Rs 1389.7 crore due to strong growth in generics and custom synthesis business partially offset by a decline in carotenoid segment. EBITDA margins fell 74 bps, 339 bps YoY, QoQ, respectively, to 32.0% due to higher employee & other expenditure. This virtually nullified strong GPM performance. EBITDA grew 8.1% YoY to Rs 444.5 crore. PAT grew 34.2% YoY to Rs 388.2 crore. Delta vis-a-vis EBITDA was due to higher other income (forex gain), lower tax rate (tax reversals).

Outlook

We expect the full-blown impact of this massive investment to fructify from FY22 onwards (after considering the time lag for regulatory inspections). We ascribe a target price of Rs 2355 based on 32x FY22E EPS of Rs 73.6.

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