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Divi’s Laboratories
Remarks : Divi's Laboratories (Divi’s) is a leading player in contract research and manufacturing services (CRAMS),
which contributes nearly 50% of its revenue. The remaining portion of its revenues comes from the
export of generic active pharmaceutical ingredients (APIs) and caretenoids. We expect Divi’s to be a key
beneficiary of the increased pharmaceutical outsourcing from India, given its strong relationships with
global innovator pharmaceutical companies.
Its India-centric business model develops and produces all APIs/intermediates with a substantial cost
advantage. Divi’s enjoys an EBITDA margin of >40%, possibly the highest amongst its peers globally.
A near debt-free balance sheet and strong cash flow (free cash flow likely to reach Rs306 crore by
FY2013) are likely to help build a war chest for pursuing strategic investments (in the space of biosimilars).
It has undertaken large capital expenditure (capex) of Rs2 billion to set up a new special economic zone
(SEZ), implying positive prospects for the outsourcing business (generally Divi’s does not undertake capex
without adequate revenue visibility from customers).
With the order inflow picking up from H2FY2011 and its new plant getting operational, Divi’s has a strong
revenue growth visibility and the operating leverage in the business will boost its margins. Consequently,
we estimate the company’s revenue and earnings would grow at a compounded annual growth rate
(CAGR) of 23% and 21% respectively over FY2011-13.
click link below for COMPLETE list, details of other company in Mahurat Picks for Diwali 2011 ::ShareKhan
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Divi’s Laboratories
Remarks : Divi's Laboratories (Divi’s) is a leading player in contract research and manufacturing services (CRAMS),
which contributes nearly 50% of its revenue. The remaining portion of its revenues comes from the
export of generic active pharmaceutical ingredients (APIs) and caretenoids. We expect Divi’s to be a key
beneficiary of the increased pharmaceutical outsourcing from India, given its strong relationships with
global innovator pharmaceutical companies.
Its India-centric business model develops and produces all APIs/intermediates with a substantial cost
advantage. Divi’s enjoys an EBITDA margin of >40%, possibly the highest amongst its peers globally.
A near debt-free balance sheet and strong cash flow (free cash flow likely to reach Rs306 crore by
FY2013) are likely to help build a war chest for pursuing strategic investments (in the space of biosimilars).
It has undertaken large capital expenditure (capex) of Rs2 billion to set up a new special economic zone
(SEZ), implying positive prospects for the outsourcing business (generally Divi’s does not undertake capex
without adequate revenue visibility from customers).
With the order inflow picking up from H2FY2011 and its new plant getting operational, Divi’s has a strong
revenue growth visibility and the operating leverage in the business will boost its margins. Consequently,
we estimate the company’s revenue and earnings would grow at a compounded annual growth rate
(CAGR) of 23% and 21% respectively over FY2011-13.
click link below for COMPLETE list, details of other company in Mahurat Picks for Diwali 2011 ::ShareKhan
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