Buy Divi's Lab - Result Update - Emkay

Reco: BUY
CMP: Rs 818
Target Price: Rs 927

Subdued quarter, Growth story remains intact - Maintain Buy

- Divi's Q3FY12 performance was below expectations with (a) Revenue at Rs4.2bn (up 33% YoY); (b) EBIDTA at Rs1.5bn (up 22% YoY) & (c) PAT at Rs1.23bn (up 21% YoY)

- Top-line growth was aided by INR depreciation, which contri-buted 13% to the top-line growth. Capacity utilization at Vizag plant remained flat QoQ, expected to scale up from Q1'13.

- EBITDA margins at 36.2% were lower than expectations in spite of INR depreciation led by increase in expenses due to commissioning of Vizag plant & higher proportion of API sales.

- Growth story remains intact – Maintain Buy with a target price of Rs927 on the stock (20x FY13 EPS of Rs46.3).

Source : Equity Bulls

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