Upgrade Divi’s Lab to Buy; Growth momentum to accelerate; Emkay

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Divi’s Lab

Growth momentum to accelerate; Upgrade to Buy

BUY

CMP: Rs 650                                       Target Price: Rs 833

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n     Getting ready for next leg of growth, scouting for acquisitions in the bio-similar space, accumulated Rs5bn cash for inorganic growth

n     Growth momentum to accelerate led by 20% CAGR in CSS (Custom Synthesis) and Generics business over FY11-13E

n     Nutraceuticals – confident of clocking over 100% sales CAGR over FY11-13E. Carotenoids* to be the next growth driver for the company

n     With increased visibility on growth on back of increase in outsourcing from customers in US & Europe, commissioning of Vizag facility in Q1FY12, we upgrade the stock to Buy