Citi has initiated coverage on Divi's Laboratories Ltd (DIVI: IN) with a Buy rating and set a price target of INR 6,400.
The financial firm's analysis suggests that Divi's Laboratories is well-positioned to benefit from pharmaceutical companies diversifying their supply chains.
The company has established itself in the market for GLP-1 APIs, which are projected to have a revenue potential exceeding $800 million by the end of CY30E.
Divi's Laboratories has been adding new products to its customer synthesis (CS) business, including names like Ribociclib and Upadacitinib.
The expansion is seen as a reflection of the growing confidence that innovators have in the company. Citi's forecast for Divi's EBITDA for FY26/27E is 3/12% higher than the consensus, driven primarily by the GLP-1 segment, which is expected to generate around $95 million in FY27E, and the introduction of new products in its CS business.
The analysis includes a bear case scenario, where a failure to scale up in the CS segment could pose a risk to their positive outlook.
In such a case, Citi has provided a bear case target price of INR 5,100, assuming no sales from the GLP-1 segment.
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