Add Divis Laboratories Ltd for the Target Rs. 7,375 by Choice Institutional Equities
Key Conference Call Highlights
Custom Synthesis Business
* Several CS projects are at different stages of development including R&D, validation, pre-qualification, Phase 2 and Phase 3, providing long-term growth visibility.
* Three dedicated CS capacity projects have completed validation phases and material has been supplied to customers, with commercialisation targeted by 2027, though this is contingent on regulatory approvals.
* Continues to invest heavily in peptide capability, including solidphase and liquid-phase synthesis.
* The company aims to become one of the largest global peptide manufacturers, supported by multiple 3,000-liter SPPS reactors.
Generic Business
* The generic segment remains under pricing pressure, constraining value growth despite healthy volume traction for products.
* The company projects additional growth from the upcoming generic products pipeline in FY27 and beyond as products gradually come off-patent.
* Most generic API contracts are backed by long-term agreements containing raw material variability clauses, enabling it to pass on a part of the increase in input cost to customers.
Nutraceuticals
* Nutraceuticals revenue for FY26 came in at INR 9,460 Mn, up from INR 7,810 Mn in FY25, reflecting healthy growth in this segment.
Outlook
* The management guided for a double-digit revenue growth, with EBITDA margin anticipated to remain stable.
* The management highlighted ongoing West Asia-led supply chain disruption, including force majeure by suppliers, higher freight costs and container shortages; however, no production stoppages have occurred.
* The management indicated that inventory levels are likely to increase in Q1FY27 as the company builds buffer stocks to secure supply continuity.
* The company remains optimistic on long-term growth opportunities in peptides, GLP-1s, contrast media and Custom Synthesis, supported by a significant ongoing CapEx and a strong development pipeline.
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SEBI Registration no.: INZ 000160131
