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Peptides and Commercial Projects Strengthen Multi-year Growth Visibility

DIVI remains on track to sustain its growth momentum, supported by healthy commercial projects, increasing peptide-related order inflows from innovators, contrast media opportunities and continued strength in nutraceuticals. We expect overall revenue CAGR of 20.8% over FY26–29E with EBITDA margin of ~32.5%. Capex is expected to remain elevated as the company continues to invest in capacity upgrades to expand into biosimilars and other high-growth segments. Accordingly, we revise FY27/28E estimate downwards by 4.6%/4.4%. However, the company’s long-term growth trajectory remains robust and it continues to be among India’s leading CDMO players. We value the stock at 50x FY28E EPS, arriving at a revised TP of INR 7,375 (from INR 6,300), assigning an ADD rating.

Q4FY26 Misses Estimate amid Margin Compression

* Revenue grew 9.5% YoY / 8.7% QoQ to INR 28,310 Mn (vs. CIE estimate: INR 30,513 Mn).

* EBITDA grew 5.4% YoY / 4.9% QoQ to INR 9,340 Mn; margin contracted 128 bps YoY / 119 bps QoQ to 33.0% (vs. CIE estimate: 34.8%).

* Reported PAT increased 13.4% YoY / 28.8% QoQ to INR 7,510 Mn (vs. CIE estimate: INR 7,847 Mn); PAT margin stood at 26.5%.

Commercial Projects and Peptides to Drive Strong CS Growth Momentum

The CS segment delivered a healthy growth in FY26, a momentum we expect to sustain over the medium term, driven by two key pillars. DIVI’s three dedicated commercial projects under way, with commercialisation expected from H2FY27E onwards. DIVI already has dedicated capacities in place for these projects, indicating strong customer stickiness and multi-year revenue visibility. Additionally, the company is witnessing increasing peptide validation from several innovator customers amid rapidly expanding global demand. Contrast media also remains a high-value innovator-linked opportunity, with further ramp-up anticipated through higher volumes and additional molecule addition. We expect the CS segment to deliver a CAGR of ~25% over FY26– 29E.

Volume-led Growth and Portfolio Shift Support Stable Growth in Generics

While the generics segment has moderated over the past few years due to pricing pressure, we forecast volume growth to offset these headwinds. DIVI continues to gain through scale, execution reliability and deeper customer integration rather than aggressive launch-led growth alone. The company is also gradually shifting towards higher-value APIs, which should support a more stable and sustainable growth trajectory. Meanwhile, the nutraceuticals segment continues to deliver a healthy growth, driven by structurally improving demand across regulated markets. Given its limited exposure to pricing volatility, we anticipate momentum to sustain, further aided by the company’s backward integration capability.

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