Hem Securities has given Buy recommendation for Divis Laboratories with a target price of Rs. 5711 in its research report issued on Nov 30, 2021

Hem Securities report on Divis Laboratories

Total Revenue stood at Rs 1987.51 Cr for Q2FY22, registering a growth of 13.6% YoY. Profit for the period increased 16.7% YoY to Rs. 606.46 Cr. Operating Margins slightly weak at 51.9% in Q2FY22 against 52.5% in corresponding period last year. Cash flow from Operations stood at Rs. 557.22 Cr in H1FY22. The company completed debottlenecking and expansion of plants which got delayed due to the pandemic. However, rising raw material prices and logistic cost restricted the margins at current levels.

Outlook

Given its strong moat, healthy financials and leadership in segment, we have a positive view on Divi’s Laboratories Ltd. Hence, we recommend our investors to BUY the scrip with target of Rs 5,711 from long term investment perspective. At CMP, the scrip is valued at P/E multiple of 61.3x on TTM EPS of Rs. 80.3.

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