ICICI Direct Recommends Buy This Pharma Stock For High Return, Board Recommends 1500% Dividend

ICICI Direct initiates coverage on the stock of Divi's Laboratories Ltd. with a positive view, recommends buy for Rs. 3,575/share target price. Considering the given target price, if you buy the stock at the current market price, it can fetch up to 10% return, considering the given target price.

On Saturday, May 20, 2023, the Board of directors of Divi's Laboratories recommended a dividend of Rs 30/share i.e. 1500% of the face value of Rs 2 each for the financial year 2022-23. The recommended dividend is subject to the approval of the members at the 33rd AGM of the company.

Recommends 1500% Dividend

The company in an exchange filing has said, "Recommended a Dividend of ₹ 30/- (i.e. 1,500%) per equity share of face value ₹ 2/- each for the financial year 2022-23, subject to approval of the members at the ensuing 33rd Annual General Meeting (AGM). The dividend shall be credited / warrants thereof dispatched within specified timelines from the conclusion of the AGM. The AGM date and record date for the purpose of the payment of dividend will be announced in due course."

Q4FY23 Results

According to ICICI Direct, Generics, CS grew QoQ, margins recovered but still below-par. Revenues were up 14.2% QoQ to Rs. 1950.8 crore. EBITDA improved 19.4% QoQ to Rs. 487.6 crore whereas EBITDA margins came in at 25% up 109 bps. Adjusted PAT increased 3.9% QoQ to Rs. 318.8 crore.

Buy for a target price of Rs. 3,575/share

ICICI Direct said, "Divi's share price has grown at 9.5% CAGR over the past three years. We upgrade the stock from HOLD to BUY as the quarter's performance (albeit lower than expected margins) and management commentary provides satisfactory visibility of performance restoration with a lag. Fast tracking of Kakinada capex also provides comfort on the expansion front. Valued at Rs. 3575 i.e. 40x FY25E EPS of Rs. 89.4."

Stock Outlook

On Monday, the share price of Divi's closed 5.38% higher at Rs. 3,265 apiece compared to its previous close. The stock traded its 52 week high on 23 May 2022 at Rs. 4,438.80 apiece and 52 week low on 14 March 2023 at Rs. 2,730 apiece, respectively.

The stock jumped 1.03% in 1 month, while it fell 0.35% in 1 week. It has fallen 24.15% in 1 year. In 3 years, it gained 40.73%. In 5 years, it gave 191.1% positive return.

About - Divi's Laboratories Ltd.

Divi's is engaged in manufacturing generic APIs and intermediates, custom synthesis (CS) of active ingredients and advanced intermediates for pharma MNCs, other speciality chemicals like Carotenoids and complex compounds like peptides and nucleotide revenues. In CS, the company maintains a strong relationship with global big pharma players while in generics it enjoys significant market share in products like Naproxen, Dextromethorphan and Gabapentin among others. Divi's is fully backward integrated in products with high market share. The management intends to follow suit in other products,

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.