ICICI Direct's research report on Divi’s Laboratories
Divi’s reported a strong Q3FY21 performance. Revenues grew 21.9% YoY to Rs 1701 crore (I-direct estimate: Rs 1770 crore). Generic segment grew 21% YoY to Rs 876 crore. Custom synthesis grew 18.9% YoY to Rs 681 crore. Carotenoids grew 45.0% YoY to Rs 145 crore. EBITDA margins expanded 525 bps YoY to 40.6% (I-direct estimates of 39.5%) due to significantly better gross margin performance (up 824 bps YoY to 69.0%) partially offset by higher staff costs. Subsequently, EBITDA grew 39.9% YoY to Rs 691 crore (I-direct estimate: Rs 699 crore). PAT grew 31.1% YoY to Rs 471 crore (I-direct estimate: Rs 492 crore) in-line with strong operational performance
Outlook
Maintain BUY with TP of Rs 4440 (vs. earlier Rs 4425) based on 40x FY23E EPS of Rs 111.0.
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