Divi's Laboratories Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹9,144.50+₹114.50 (+1.27%)

DalalBaazaar Score

71 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:03 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Divi's Laboratories Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Divi's Laboratories Limited engages in the manufacture and sale of generic active pharmaceutical ingredients (APIs), intermediates, and nutraceuticals in India, North America, Asia, Europe, and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees11,565

Annual revenue₹10,476 Cr

How does it make money?

Turns over ₹10,476 Cr a year. Of every ₹100 of sales, about ₹25 reaches shareholders as profit, with ₹38 left at the operating level before interest, tax and depreciation. Each of its 11,565 employees supports ₹90.6 lakh of revenue a year, the signature of a people-led business.

EBITDA margin37.6%

Net margin24.5%

Revenue / employee₹90.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, DR. REDDY S LABORATORIES, CIPLA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

SUN PHARMACEUTICAL IND LP/E 34.9x · ROE 14.5%

DR. REDDY S LABORATORIESP/E 31.0x · ROE 8.8%

CIPLA LTDP/E 31.8x · ROE 9.8%

What is its competitive advantage?Some evidence

ROCE of 19.0% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE19.0%

ROE15.3%

Peer median ROE9.8%

What is the outlook?

27 analysts covering the stock expect revenue to grow about 19.2% and earnings to grow about 22.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+19.2%

Est. earnings growth+22.4%

Analysts27

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +37% while net margin moved +3% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+37%

Margin effect+3%

DalalBaazaar Score

71/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 83.0x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 79.7x
✗ P/B of 14.48x is a steep premium to book

Quality vs. Valuation

Company Quality

77/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

32/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

83.0x

3Y Median

79.7x

40 monthly readings · mean 79.9x · range 49.3x–113.0x

Sector Median

31.8x

median of 3 sector peers

🟡Currently trading close to its 3y median of 79.7x — the market is paying about what it usually pays for this company.

⚠️Against its sector it trades 161% above the peer median of 31.8x.

vs. its own history

Fair

79.7x median over 40 months · +4%

vs. sector peers

Expensive

31.8x median of 3 peers · +161%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

83.0x

P/B

14.48x

EV/EBITDA

61.5x

PEG

6.87

Dividend Yield

0.33%

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 35.3% to 37.6% over 3 years.
Very low debt
Debt/Equity of 0.04x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Debt is rising
Total debt is up 75% over 3 years — worth checking what it funded.
Receivables growing faster than sales
Receivables are up 66% against revenue growth of 37% — customers are taking longer to pay.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 75% over 3 years, from ₹4 Cr to ₹7 Cr.
🟡Receivables growing faster than salesFinancial
Receivables up 66% against revenue up 37% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 19.0% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 35.3% to 37.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹218 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 66% against revenue up 37%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 161% above the peer median. That premium needs a reason that persists, or it closes.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 8% a year✓ 11.0% CAGR
Latest reported year was 27.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 36%✓ 37.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹218 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 19.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

11 / 12 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

8 good · 1 neutral · 2 weak

Market Cap

₹2.43 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

83.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

14.48x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹110.21

Profitable

Profitable on a per-share basis

ROE

15.3%

Strong

Strong capital efficiency

ROCE

19.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.04x

Low

Conservative leverage

Revenue Growth (YoY)

27.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

65.7%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.33%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹218 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹9,144.5

P/E (Forward)

60.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

36.7%

Good

Healthy core-business profitability

Net Margin

26.0%

Good

Strong bottom-line conversion

Current Ratio

5.43

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.23

Defensive

Steadier than the market

52W Range Position

85%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

9372.4 / 9098.2

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

35.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹7,665 Cr	₹7,796 Cr	₹9,325 Cr	₹10,476 Cr	+11.0%
EBITDA	₹2,708 Cr	₹2,543 Cr	₹3,319 Cr	₹3,944 Cr	+13.4%
EBITDA Margin	35.3%	32.6%	35.6%	37.6%	—
PAT (Net Profit)	₹1,824 Cr	₹1,600 Cr	₹2,191 Cr	₹2,568 Cr	+12.1%
EPS	₹68.69	₹60.27	₹82.53	₹96.75	+12.1%
ROE	14.3%	11.8%	14.6%	15.3%	—
ROCE	17.8%	15.3%	18.9%	19.0%	—
Total Debt	₹4 Cr	₹3 Cr	₹4 Cr	₹7 Cr	+20.5%
Free Cash Flow	₹1,986 Cr	₹258 Cr	₹215 Cr	₹218 Cr	-52.1%

🟢 Revenue has grown at 11.0% a year over 3 years.

🟢 EBITDA has grown at 13.4% a year over 3 years.

🟢 EBITDA Margin has risen from 35.3% to 37.6% over 3 years (+2.3 pts).

🟢 PAT (Net Profit) has grown at 12.1% a year over 3 years.

🟢 EPS has grown at 12.1% a year over 3 years.

🟢 ROE has risen from 14.3% to 15.3% over 3 years (+1.0 pts).

🟢 ROCE has risen from 17.8% to 19.0% over 3 years (+1.2 pts).

🔴 Total Debt has grown at 20.5% a year over 3 years.

🔴 Free Cash Flow has shrunk at 52.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹20,033 Cr

Total Liabilities

₹3,272 Cr

Total Debt

₹7 Cr

Cash & Equivalents

₹128 Cr

Operating Cash Flow

₹2,738 Cr

Capex

-₹2,520 Cr

Shareholding (proxy)

Institutional Holding

29.2%

Insider Holding

52.0%

Corporate Actions

Next Earnings

31 Oct 2026

Dividend Rate

₹30

Ex-Dividend Date

24 Jul 2026

Analyst Consensus

Recommendations

14 Buy · 6 Hold · 9 Sell

Target Price (Mean)

₹8,571.31

-6.3% vs CMP

Target Range

₹6,336 – ₹11,700

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
DR. REDDY S LABORATORIES	31.0x	8.8%
CIPLA LTD	31.8x	9.8%

Recent News

1 positive3 mixed2 general

DIVISLAB Outlook for the Week

Equitypandit, 16 Oct

1500% Dividend Bonanza! Pharma Stock In Spotlight After Mega Payout; Record Date Announced

Goodreturns, 16 OctCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

DIVISLAB Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Divi's Laboratories Share Price: Price Action and Valuation

Univest, 06 Oct

Divi's Labs shares jump 4%; Highest price target reaches ₹11,700 after Q1 results

CNBC TV18, 03 AugPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Divi's Labs rallies 5% on strong Q1; surpasses Eicher, Hindalco in mcap

Business Standard, 03 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong15.8/20

🟢Financial HealthStrong15.6/20

🟢GrowthStrong13.4/20

🟢ProfitabilityStrong12.8/15

🔴ValuationDemanding5.3/15

🟢RiskLow8.4/10

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 8% a year11.0% CAGR
✓EBITDA margin holds above 36%37.6%
✓Free cash flow remains positive₹218 Cr
✓Debt / EBITDA stays below 2x0.0x
✓ROCE stays above 16%19.0%