Although the outlook has improved, domestic brokerage house Motilal Oswal Financial Services stated that the value of Divi Labs remains expensive assuming flat earnings growth in FY24. 2,620, implying a downside risk of 6%.
Divi’s Labs is now selling for 2,798. The stock has increased by 169.81% during the past five years. Shares of Divis Laboratories reached a 52-week high of 4,640.80 on April 28, 2022, and a 52-week low of 2,730 on March 14, 2023.
Recently, Divis Laboratories has noticed a decrease in the price of raw materials. Also, it has extensively consumed expensive raw materials. Power/fuel costs as well as shipping costs have also been covered.
The statement also stated that overall, a decrease in cost pressure is anticipated to restore Divi’s profitability.
By lowering cost drag, bespoke synthesis business in the contrast media/peptide category, as well as sartans/other novel molecules in API industry, brokerage elements have led a 260 basis point profit expansion over FY23-FY25.
“In FY23–25, we anticipate a 15% CAGR in earnings, with a YoY increase of 30% in FY25. Because of gains relating to molnupiravir recorded in 1HFY23 and the steady improvement in profitability/outlook in the API generic business, we anticipate earnings to be flat YoY in FY24 “It read.
Dr Lal PathLabs maintains ‘bearish stance’
Kotak Institutional Equities kept its bearish position on Dr Lal PathLabs and reiterated the downside risk to their flat long-term pricing forecasts.
“At 50x FY2024 EPS, valuations remain high, with strong pricing in a long-term volume growth narrative,” the brokerage said, maintaining its “Sell” rating on the stock.
The brokerage stated that despite a decrease in the intensity of competition from smaller online competitors, it nevertheless remains suspicious of any material profits increase to listed incumbents like DLPL.
“According to us, top-tier health IT platforms and sizable offline competitors continue to pose the actual threat. In addition to pricing, DLPL may have increased margin pressure as a result of escalating marketing expenditures, technology investments, and expansion into Tier 2/3 markets. Our DCF-based FV 1,610 represents a 13% rise in sales over the next ten years “The message read.
disclaimer, The views and recommendations given above are of individual analysts or broking companies and not of o2help,
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