Divi’s Laboratories Receives Highest Price Target After Exiting Nifty 50

Divi’s Laboratories Ltd., a renowned drug manufacturer, recently received a notable “buy” recommendation from brokerage firm Citi, coupled with a price target of ₹6,400 per share. This new target stands as the highest estimation for Divi’s stock, surpassing the typical projections of ₹6,000 or higher within the financial market.

On the National Stock Exchange (NSE), the price target implies a potential upside of approximately 15% from the closing levels observed on Tuesday, according to Citi’s analysis.

Recently, Divi’s Laboratories was excluded from the Nifty 50 index, along with another company, LTIMindtree. These companies were replaced by Trent and Bharat Electronics, which are new entrants to the index.

In its analytical note, Citi emphasized that Divi’s Laboratories has strategically positioned itself within the Glucagon-like Peptide 1 (GLP-1) Active Pharmaceutical Ingredients (APIs) market. This sector presents an anticipated revenue opportunity of about $800 million for the company by the year 2030, as innovators strive to mitigate risks in their supply chains.

Citi identifies Divi’s as a potential key player benefiting from the supply chain diversification trend. This trend indicates growing trust among innovators in Divi’s capabilities, as evidenced by the increase of new partnerships in its Custom Synthesis (CS) business.

The brokerage firm has estimated that Divi’s financial year 2026 and 2027 Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) could exceed consensus forecasts by 3% and 12% respectively. This growth is largely attributed to the company’s GLP-1 and CS product lines.

Despite the optimistic outlook, Citi has highlighted the risk associated with Divi’s inability to scale up its Custom Synthesis business. In its bearish scenario, Citi projects a lower price target of ₹5,100 for Divi’s Laboratories.

Analyst sentiment is varied regarding Divi’s Laboratories, with nine out of 28 analysts issuing a “buy” rating, six opting for a “hold” stance, and 13 recommending a “sell”.

Amidst these developments, shares of Divi’s Laboratories witnessed a 4.1% increase in trading on Wednesday, reaching ₹5,774. Throughout 2024, the company’s stock has seen a substantial rise of 47%, reflecting its performance amidst changing market dynamics.