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Divi's Labs falls 4% after Q1 miss, analysts trim estimates; check details
In the last two trading sessions, the stock has tanked 7 per cent after the company reported mixed performance in the June 2025 quarter (Q1FY26). The stock has tumbled around 16 per cent from its 52-week low of ₹7,071.5 touched on July 8, 2025.
At 1:15 PM, Divi's Lab stock was trading 2.1 per cent lower at ₹6,004.5 per share on the NSE. In comparison, NSE Nifty50 was down 0.72 per cent at 24,39.5 levels. The market capitalisation of the company stood at ₹1.59 trillion.
Divi's Laboratories Q1 results
Divi's Laboratories reported a 14 per cent year-on-year (Y-o-Y) jump in revenue at ₹2,410 crore in Q1FY26, compared to ₹2,118 crore in the year-ago period. The company's net profit grew 27 per cent Y-o-Y to ₹545 crore from ₹430 crore last year. Operating profit (Ebitda) rose 16.3 per cent to ₹756 crore, against ₹650 crore in the same quarter last year. Operating margin expanded by 70 basis points to 31.4 per cent from 30.7 per cent.
Divi's Laboratories Q1 results analysis - Motilal Oswal Financial Services
Analysts at MOSFL said that Divi's Labs reported revenue, Ebitda, and PAT below their estimates, affected by lower traction in the generics segment and increased operational expenditure. However, Q1FY26 was the seventh consecutive quarter of
robust YoY growth in earnings.
"Custom synthesis business has been witnessing strong growth momentum, driven by robust engagement across clinical phases and at the commercial stage. Divi's continues to build technology platforms and add capacities to support manufacturing requirements for innovator customers," the brokerage said. Additionally, the company is making efforts to sustain market share in the generics API space. It is also working on the manufacturing value chain to keep profitability intact.
MOFSL slashed their earnings estimates by 8 per cent and 6 per cent for FY26 and FY27, respectively, factoring in the current pricing pressure in the generics segment, incremental operational expenditure related to new projects, and revenue being back-ended.
"We estimate 20 per cent earnings CAGR over FY25-27 on the back of improved business prospects in the CS segment as certain contracts are currently undergoing pilot study/qualification and subsequently expected to scale up to the commercial level. Notably, peptide is expected to be the next breakthrough opportunity for DIVI. However, the current valuation leaves limited upside," MOFSL said in a note.
The brokerage maintained a 'Neutral' rating on the stock with a target price of ₹6,320.
InCred Equities
According to analysts at InCred Equities, Divi's Laboratories posted a healthy Q1FY26 performance but missed on the margin front. The custom synthesis business grew by 23 per cent Y-o-Y while the generics segment was weak.
"The Kakinada plant aids in backwards integration, and its units 1 and 2 are freed for GMP manufacturing. FY26F capital expenditure (capex) revised to ₹20 billion from ₹14 billion earlier," the brokerage said.
InCred Equities trimmed their FY26F/27F estimates to factor in slower-than-expected growth in generics and
margin improvement. The brokerage maintained an 'Add' rating on the stock with a target price of ₹6,800 (₹7,100 earlier), noting that Divi's premium valuation (significantly above SD+1 level) is likely to remain buoyant, underpinned by structural tailwinds and margin expansion.
InCred highlighted that any slowdown in the custom synthesis business could pose downside risks.
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