Divi's Laboratories Q1 misses estimate; stock slips; what should investors do?

Shares of Divi's Laboratories slipped over 2 per cent in Monday's (August 5) trade after the pharmaceutical company reported weak Q1FY25 numbers. 

At around 9:50 a.m., shares of Divi's Laboratories fell 1.73 per cent or Rs 86.5 at Rs 4,904.75 on NSE. The market capitalisation of the compnay stood at Rs 1,30,205.7 crore at around the same time.  

How did Divi's Labs fare in Q1FY25? 

Pharma giant Divi's Labs on August 3 reported a 21 per cent year-on-year (YoY) rise in consolidated net profit at Rs 430 crore against Rs 356 crore. The profit after tax was estimated at Rs 514 crore. 

The revenue for the first quarter stood at Rs 2,118 crore against Rs 1,778 crore a year ago. The revenue was estimated at Rs 2,222 crore. The earnings before interest, tax, depreciation, and amortisation (EBITDA) stood at Rs 622 crore against Rs 504 crore YoY, up 23 per cent (Estimation was at Rs 716 crore). The company's margins stood at 29.4 per cent against 28.3 per cent (Estimation was at 32 per cent).

What should investors do? 

Global brokerage Jefferies has maintained a 'hold' on Divi's Labs and has raised the target to Rs 4,830 from Rs 4,050 apiece.  Meanwhile, Goldman Sachs continued with a 'neutral' rating and raised the target to Rs 4,575 from Rs 4,300. As per the brokerage, Rev /EBITDA grew 19 per cent/23 per cent YoY, broadly in line primarily led by the Custom synthesis segment. 

The company's EBITDA margin came in at 29.4 per cent mainly on the back of better operating leverage. Additionally, the company reiterated its double-digit growth outlook. 

Divi's Labs share price: Past performance

Shares of Divi's Labs gained over 25 per cent in a year against Nifty50's rise of 23 per cent. 

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