Despite a dip earlier this year, Divi’s Laboratories Ltd shares showed strong recovery, bottoming out at ₹3,370 per share by the end of March 2024. The company’s strong performance and promising outlook have made its shares an attractive option for investors. Divi’s Lab’s Q4 results for 2024 exceeded expectations, boosting investor confidence. Analysts believe that the stock is poised for further growth, with shares potentially reaching ₹4,630 each.
Reasons for Divi’s Lab Share Price Rally
Prathamesh Masdekar, a Research Analyst at StoxBox, highlighted key reasons behind the rally. Divi’s Lab’s Q4FY24 performance exceeded expectations, mainly due to higher revenue from its synthesis business, which improved operating margins. The company is optimistic about its custom synthesis business, new API/intermediate supply opportunities, and the China+1 strategy, expecting mid-teens sales growth.
The company anticipates sustained long-term growth in the custom synthesis business, driven by ongoing projects, new project enquiries, and a long-term supply agreement with a multinational company. This agreement involves an investment of ₹6.5-7 billion for capacity addition, expected to be operational by January 2027. Divi’s Lab is also preparing for upcoming complex peptide opportunities and targeting multiple new generic filings across regulated markets, with some expected to start contributing from late FY25.
Divi’s Lab Share Price Target
Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi, provided a technical analysis of Divi’s Lab shares. After a decline earlier this year, the share price found a bottom and started rising in April and May. The stock broke out at the ₹4,100 level on the weekly chart, indicating a potential rise to ₹4,630 per share in the near term.
Dongre advises current shareholders to hold onto their shares with a stop loss at ₹4,020 and to buy more during significant dips. New investors can also consider buying Divi’s Lab shares at the current market price of ₹4,630, using a buy-on-dips strategy with a stop loss at ₹4,020.
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