Divi’s Laboratories Stock Shines to Peak; Should You Buy?

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Divi’s Laboratories Stock: Experts Optimistic Amid Valuation Debate

By S Jha

New Delhi, April 24, 2025: Divi’s Laboratories Ltd., India’s second-largest pharmaceutical company by market capitalization, has emerged as a standout performer in 2025. The Divi’s Laboratories stock was trading with gains of almost five per cent in a weak market on Thursday.

The Divi’s Laboratories stock is also approaching its all-time high. Gains in the stock came in full force during the unveiling of the US-China trade war.

With a market cap of over ₹1,57,891 crore, the Divi’s Laboratories stock has seen robust investor interest, driven by strong export growth, strategic partnerships, and capacity expansions.

However, as the stock hovers near its 52-week high of ₹6,285.45, experts on X and media outlets express a mix of bullishness and caution, citing premium valuations and potential headwinds.

Strong Fundamentals Fuel Rally

Divi’s Laboratories reported a consolidated total income of ₹2,401 crore for Q3 FY25, up 23.13 per cent year-on-year, with a net profit of ₹589 crore, according to LiveMint. The company’s focus on generic active pharmaceutical ingredients (APIs), custom synthesis, and nutraceuticals has solidified its position as a global leader, exporting to over 100 countries.

The supply chains disruption during the China-US trade war is seen positive for the company as it’s a competitor of Chinese peers.

A recent long-term manufacturing and supply agreement with an undisclosed global pharma company for advanced intermediates, announced on April 18, 2025, has further boosted sentiment.

Moneycontrol notes that this deal, coupled with a ₹650–700 crore capacity expansion funded internally, positions Divi’s for significant revenue growth. Analysts are particularly upbeat about Divi’s pipeline.

Citi, in a note shared by @nimeshscnbc on X, raised its target price to ₹7,050, citing Divi’s potential to become a primary supplier for Eli Lilly’s oral GLP-1 drug, Orforglipron, with a capacity addition of 300 metric tons.

“Divis has high potential to become primary supplier given capacity addition,” the post stated. Similarly, BofA maintained a ‘buy’ rating, as reported by @NDTVProfitIndia on X, emphasizing Divi’s robust growth in custom synthesis and peptide drugs.

Technical Strength and Market Sentiment

From a technical perspective, Divi’s stock is showing bullish signals. Moneycontrol highlights a “very bullish” trend, with the stock trading above key support levels. Analysts on TradingView suggest the stock is nearing a breakout from a complex W-X-Y corrective pattern, with potential targets in the ₹6,100–6,400 range if it stays above the ₹5,860 resistance.

TradingView noted the stock’s resilience near the 180-day moving average.

Valuation Concerns and Market Risks

However, premium valuations are a growing concern. Divi’s trades at a P/E ratio of 98.08 and a P/B ratio of 11.56, significantly above the sector median of 49.96 and 2.49, respectively, per Value Research.

On X, some users have expressed skepticism. While no specific bearish posts were cited, broader discussions highlight concerns about margin pressures and competition in the CDMO (contract development and manufacturing organization) space.

Analyst Ratings and Strategic Positioning

Divi’s enjoys strong institutional backing, with mutual fund holdings rising to 12.83 per cent and FII holdings increasing to 18.01 per cent as of March 31, 2025, per LiveMint. The company’s debt-free balance sheet and 28 per cent pre-tax margin underscore its financial stability, as highlighted by 5paisa.

Strategically, Divi’s is well-positioned to capitalize on the global pharmaceutical market’s projected growth to $1.9 trillion by 2027, driven by oncology and anti-diabetic drugs, per a January 2023 IMF report quoted by StockEdge.

The company’s 41 patents, 40 USFDA drug master files, and new Greenfield project set to commence in December 2024 enhance its competitive edge.

What Lies Ahead?

Divi’s Laboratories’ focus on high-potency APIs, custom synthesis, and capacity expansion aligns with the pharmaceutical sector’s growth trajectory. StockEdge praises its leadership in generic APIs, with a portfolio of over 160 products and a presence in diverse therapeutic areas.

As @REDBOXINDIA noted on X, Divi’s Q4 FY24 exports surged 23 per cent year-on-year to $85 million, signaling robust demand that could sustain momentum. Divi’s stock may face near-term volatility but remains a compelling bet for those eyeing the pharmaceutical sector’s structural growth.

Investors are advised to consult certified financial experts before making decisions, as global pricing pressures and market corrections could impact returns.

Disclaimer: The views expressed by analysts and X users are their own and not necessarily those of this publication.

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