DIVISLAB - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.4

📊 Core Financials

Earnings & Profitability: EPS of ₹88 and PAT of ₹557 Cr this quarter (down from ₹667 Cr) show solid profitability despite a sequential dip. ROCE at 20.6% and ROE at 15.6% reflect strong capital efficiency.

Debt Profile: Debt-to-equity of 0.00 — completely debt-free, which enhances resilience and cash flow flexibility.

Cash Flow: With consistent profits and zero debt, Divi’s Laboratories maintains robust operating cash flows. Net profit margin is ~20.4%, and operating margin is ~27.6%

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💰 Valuation Indicators

Metric Value Insight

P/E Ratio 69.4 Rich vs. industry PE (33.4), but supported by brand and margins

P/B Ratio ~10.9 High premium over book value

PEG Ratio -7.54 Negative PEG suggests earnings contraction or forecast uncertainty

Dividend Yield 0.49% Modest, consistent payout

Valuation is elevated, and the negative PEG ratio flags caution despite strong fundamentals.

🧪 Business Model & Competitive Advantage

Divi’s Laboratories Ltd. is a global leader in active pharmaceutical ingredients (APIs) and intermediates. Key strengths include

World-class manufacturing facilities in Hyderabad and Visakhapatnam

Supplies to over 100 countries, including top global pharma firms

Strong R&D with 400+ scientists and 17,000 employees

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Regulatory compliance with USFDA, EU GMP, and WHO standards

The company is forecast to grow earnings by 17.9% and revenue by 15.6% annually, with ROE expected to reach 18.1% in three years

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📈 Technical & Sentiment Indicators

RSI: 48.1 – Neutral zone, suggesting consolidation.

MACD: -58.0 – Bearish crossover, indicating short-term weakness.

Volume Surge – Above weekly average, signaling rising interest.

DMA 50 & 200: Price is hovering near both, confirming technical stability.

Despite recent weakness, analysts remain optimistic. EPS is expected to grow by 16.6% annually

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💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹5,950–₹6,050, near DMA 200 and below current price.

Current Price ₹6,102: Slightly above ideal entry — consider partial accumulation or wait for a dip.

🕰️ Long-Term Holding

Strong Hold or Accumulate on Corrections: Debt-free status, global leadership in APIs, and consistent margins make Divi’s a high-quality long-term compounder.

Watch Valuation & Institutional Sentiment: FII inflow (+1.73%) is encouraging, but DII outflow (−1.67%) and high valuation suggest short-term caution.

You can explore Divi’s future growth forecast and analyst coverage

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or review its long-term share price targets and peer comparison

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. Let me know if you'd like a peer comparison with Sun Pharma or Dr. Reddy’s.

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shareprice-target.com

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simplywall.st

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