Religare puts 'buy' on Divi's Lab; target Rs 1,833
Religare Research has maintained ‘buy’ on Divi’s Laboratories for a target price of Rs 1,833. The company has reported in-line results for April-June 2008-09.
By ET Online |
MUMBAI: Religare Research has maintained ���buy��� on Divi���s Laboratories for a target price of Rs 1,833. The company has reported in-line results for April-June 2008-09. The company has maintained its momentum in the custom chemical services segment on the back of strong client relationships, while generic API was driven by new product launches and consolidation of market share in existing products.
Recent launches under neutraceuticals contributed Rs 3 crore to the quarterly numbers. A strong product mix resulted in a 450 basis points year on year expansion in EBITDA margin to 40.8 per cent, despite a forex loss of Rs 9 crore. Lower tax outgo aided a 45 per cent year on year rise in profit after tax to Rs 94.3 crore.
Divi's mega capital expenditure of Rs 250 crore executed over FY05-FY07 would generate incremental value in 2008-09. Capacity expansion in chemical services segment has enabled the company to execute more contracts from innovators (33% revenue CAGR over FY08-FY10), while the focus on niche, difficult to manufacture APIs has resulted in market leadership for key products (21% revenue CAGR over FY08-FY10).
The company had a favourable start to its recently introduced products in the neutraceuticals space and remains on track to achieve sales of Rs 30-40 crore for 2008-09.
Divi's has remained Religares��� preferred pick in the Indian CRAMS space, given its healthy relationship with top innovators amid a growing outsourcing trend. Through its focus on high-margin chemical services segment, the company's EBITDA margin will remain amongst the highest in the CRAMS segment. Religare has estimated a profit after tax CAGR of 31 per cent to Rs 600 crore over FY08-FY10.
Recent launches under neutraceuticals contributed Rs 3 crore to the quarterly numbers. A strong product mix resulted in a 450 basis points year on year expansion in EBITDA margin to 40.8 per cent, despite a forex loss of Rs 9 crore. Lower tax outgo aided a 45 per cent year on year rise in profit after tax to Rs 94.3 crore.
Divi's mega capital expenditure of Rs 250 crore executed over FY05-FY07 would generate incremental value in 2008-09. Capacity expansion in chemical services segment has enabled the company to execute more contracts from innovators (33% revenue CAGR over FY08-FY10), while the focus on niche, difficult to manufacture APIs has resulted in market leadership for key products (21% revenue CAGR over FY08-FY10).
The company had a favourable start to its recently introduced products in the neutraceuticals space and remains on track to achieve sales of Rs 30-40 crore for 2008-09.
Divi's has remained Religares��� preferred pick in the Indian CRAMS space, given its healthy relationship with top innovators amid a growing outsourcing trend. Through its focus on high-margin chemical services segment, the company's EBITDA margin will remain amongst the highest in the CRAMS segment. Religare has estimated a profit after tax CAGR of 31 per cent to Rs 600 crore over FY08-FY10.
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