Divis share price

Shares of drug firm ICICI Securities in a note highlighted that the company's Q2FY22 results came in below its estimates. The brokerage has downgraded its rating on Divi's Labs to 'reduce' from a 'hold' call and has revised the target to Rs 4,628/share from Rs 4,828/share. Motilal Oswal has reduced its FY22E/FY23E estimate by 5%/2% to reflect some slowdown in offtake related to the generics segment and higher operational costs. But Motilal has reiterated its 'buy' rating on the stock with a target price of Rs 6,050/share. Divi's consolidated revenue saw a growth of 13.6% YoY in Q2. The company's EBITDA margin at 41.2% dropped 120 bps YoY while the gross margin remained flat. Rising raw material prices, logistical issues & declining generics business would restrict margins at current levels in the near term, ICICI Securities says. The brokerage has cut revenue and EPS estimates by 3-4% and 4-6% respectively to factor in the aforementioned concerns. ICICI Securities estimates revenue/EBITDA/PAT CAGR of 17.7%/19.9%/21.4% over FY21-FY23E. The brokerage believes that the premium valuation of the stock is justified and will continue due to its strong execution track record, high growth visibility and superior return ratios. However, it does note that the recent rally has made valuations expensive and has downgraded the stock as such. On the upside, ICICI Securities believes Divi's Labs' revenue growth will be led by market share gain in existing products, new launches, and growi...