Divis Laboratories' share price slipped nearly 9 percent in the morning trade on November 8 after the pharma company reported its September quarter numbers.
Divis Laboratories posted a 16.71 percent jump in consolidated net profit at Rs 606.46 crore for the quarter against Rs 519.59 crore in the same quarter last fiscal, the company said on November 6.
Its consolidated total income stood at Rs 2,006.62 crore against Rs 1,762.94 crore in the year-ago quarter.
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Here is what brokerages have to say about the stock and the company post September quarter earnings:
Goldman Sachs
Goldman Sachs has kept a “buy” rating on the stock with the target at Rs 5,840.
The Q2 was a miss, while Covid oral anti-viral opportunity is in focus. Generic API business too was a miss as customers’ destocked inventory from the high base of last year.
API miss was partially offset by CMO product opportunities announced in mid-FY21, however, the margin came off but remained buoyant at 41 percent.
Jefferies
The research house has downgraded the stock to “hold” and cut the target price to Rs 5,563.
The Q2 revenue/EBITDA missed the estimates by 2 percent/3 percent but profit beat on lower taxes.
Pfizer’s Covid oral drug candidate Paxlovid shows efficacy of 89 percent and it could pose a risk to Divis’ Molnupiravir prospects.
Surging raw materials prices are likely to restrain margin profile. The stock trades at an expensive valuation and a major upside is unlikely.
Motilal Oswal
We reduce our FY22E/FY23E EPS estimates by 5 percent/2 percent to reflect some slowdown in offtake related to the generics segment and higher operational costs.
Our target price stands at Rs 6,050 based on 36x 12-month forward earnings. We remain positive on Divis on the back of: a) strong demand in the CS segment, b) reduced cost of production due to backward integration, and c) the Kakinada project being back on track. We reiterate our “buy” rating.
ICICI Securities
We cut revenue and EPS estimates by 3-4 percent and 4-6 percent, respectively, to factor in rising costs of raw materials and logistics as well as declining generics business.
The recent rally in stock has made valuations expensive. We downgrade the stock to “reduce” from “hold” with a revised target price of Rs 4,628 from Rs 4,828 a share based on 42xFY23E EPS.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.