Citi Initiates Coverage on Divi's Laboratories with Buy Rating and INR 6,400 Price Target
Citi has recently started covering Divi's Laboratories Ltd (DIVI: IN) with a Buy rating and a price target of INR 6,400, signaling a positive outlook for the pharmaceutical company. Their analysis indicates that Divi's Laboratories is in a prime position to benefit from the trend of pharmaceutical companies diversifying their supply chains.
The company has made a mark in the market for GLP-1 APIs, with a revenue potential expected to exceed $800 million by the end of CY30E. Additionally, Divi's Laboratories is expanding its customer synthesis (CS) business by introducing new products like Ribociclib and Upadacitinib, showcasing the confidence that innovators have in the company.
Citi's forecast for Divi's EBITDA for FY26/27E is significantly higher than the consensus, driven mainly by the GLP-1 segment, which is projected to generate around $95 million in FY27E. However, the analysis also includes a bear case scenario where a failure to scale up in the CS segment could pose a risk to their positive outlook, resulting in a bear case target price of INR 5,100.
In conclusion, Divi's Laboratories seems to be on a path of growth and success, with promising opportunities in the pharmaceutical market. Investors should keep an eye on the company's performance in both the GLP-1 segment and the CS business to make informed decisions about their investments.