Stock Market Highlights: Markets close flat! Nifty above 22,900, Sensex below 75,400

Prabhudas Lilladhar anticipates a 26% EBITDA CAGR and 27% PAT CAGR over FY24-26E. Currently, the stock is trading at 43x FY26E EPS. Consequently, Prabhudas Lilladhar has upgraded the stock’s rating from ‘Reduce’ to ‘Accumulate’, with a revised target price of Rs4,350/share, valuing it at 45x FY26E EPS, compared to the previous 35x.

According to a report by Prabhudas Lilladhar on Divi’s Laboratories, their FY25E/FY26E EPS estimates have been increased by approximately 10%. This adjustment comes after Divi’s Laboratories (DIVI) reported Q4FY24 EBITDA, which was 18% higher than their estimate, driven by increased custom synthesis (CS) revenues, up 47% YoY, and improved operating leverage. 

The report notes that gross margins (GMs) have largely stabilized over the last few quarters and are expected to improve further due to a better product mix and stable raw material prices. 

Management has indicated that a moderation in raw material prices, along with an increase in request for proposal (RFP) and the commencement of certain contracts for Contract Development and Manufacturing Organization (CDMO) and contrast media, will continue to support revenues and margins.