Divi's Laboratories - Q1FY21 Result Update - ICICI Securities

Revenues grew a robust 48.8% YoY to Rs. 1730 crore (I-direct estimate: Rs. 1303 crore) on the back of strong growth across segments. Generic segment grew 54.0% YoY to Rs. 894 crore. Carotenoids grew 19.8% YoY to Rs. 127 crore. Custom synthesis grew 48.9% YoY to Rs. 709 crore. EBITDA margins expanded 716 YoY, 847 bps QoQ to 40.5% (I-direct estimates: 32.5%) due to significantly better overall operational performance. Hence, EBITDA grew 80.8% YoY to Rs. 700 crore (I-direct estimate: Rs. 423 crore). PAT grew 80.6% YoY to Rs. 492 crore (I-direct estimate: Rs. 307 crore) in line with strong operational performance.

Valuations & Outlook

Q1 results were way ahead of I-direct estimates on all fronts. More than strong quarterly performance (that management stresses that in a business like this can be lumpy) important narrative for Divi's is unprecedented capex to further augment capacities besides preparing for growing opportunities arising due to China factor. The company has earmarked an aggressive capex of ~Rs. 1800 crore (including Rs. 300 crore for backward integration), over and above ~Rs. 2000 crore spent in the last five years. We expect the full-blown impact of this massive investment to fructify from FY22 onwards. The company stays a quintessential play in the Indian API/CRAMs segment with its product offerings and execution prowess. We upgrade from HOLD to BUY with a target price of Rs. 3260 based on 38x FY22E EPS of Rs. 85.8.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_DivisLab_Q1FY21.pdf

Shares of DIVI'S LABORATORIES LTD. was last trading in BSE at Rs.3135.75 as compared to the previous close of Rs. 3117.1. The total number of shares traded during the day was 61612 in over 7358 trades.

The stock hit an intraday high of Rs. 3172.65 and intraday low of 3087.65. The net turnover during the day was Rs. 192606152.

Source : Equity Bulls

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