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Remarks: Strong M9FY2012 performance (PAT growth 27%) has re-affirmed our confidence in the growth potential of
Divi’s Labs.
The new DSN SEZ facility at Vishakhapatnam that started production from one of its blocks in June 2011 (the
remaining blocks of this facility are likely to get operational over FY2012-13) is likely to bring better economies
of scale and tax benefits.
A near debt-free balance sheet and strong cash flow are likely to help build a war chest for pursuing strategic
investments (biosimilars) and exploit growth opportunities in niche segments like high potency drugs for
oncology and steroids for contraceptives.
With the order inflow picking up 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. At the current market price the
stock trades at a PE multiple of 16.6x discounting its FY2013E earnings. We maintain our Buy recommendation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Remarks: Strong M9FY2012 performance (PAT growth 27%) has re-affirmed our confidence in the growth potential of
Divi’s Labs.
The new DSN SEZ facility at Vishakhapatnam that started production from one of its blocks in June 2011 (the
remaining blocks of this facility are likely to get operational over FY2012-13) is likely to bring better economies
of scale and tax benefits.
A near debt-free balance sheet and strong cash flow are likely to help build a war chest for pursuing strategic
investments (biosimilars) and exploit growth opportunities in niche segments like high potency drugs for
oncology and steroids for contraceptives.
With the order inflow picking up 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. At the current market price the
stock trades at a PE multiple of 16.6x discounting its FY2013E earnings. We maintain our Buy recommendation.
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