Divi's Labs (DIVI), in addition to having a robust base business, is enhancing its product offerings in the generic API space - at least sixteen molecules are under various phases of development and in the subsequent DMF filing stage.

Motilal Oswal Financial Services has recommended buying Divis Laboratories with target price of Rs 4,530 in its report.

Commenting on the investment rationale, the broking firm said, "Particularly, we find DIVI's work interesting in the Contrast Media segment. While there is complexity associated with Iodine-based products, DIVI's strong chemistry skill set and experience in the Contrast Media space have enabled it to bring the Iohexol API to the validation phase.We believe DIVI is well-placed to capitalize on the carotenoid opportunity, with a 21% sales CAGR to Rs 8 billion expected over FY20-23. This would be driven by healthy demand, product offerings, integrated manufacturing, and the doubling of capacity.

We continue to value DIVI at 36x 12M forward earnings to arrive at TP of Rs 4,530. We reiterate Buy, encouraged by promising demand prospects and multiple growth levers - a) new product additions, b) a strong chemistry skill set, c) efficient manufacturing capabilities, d) scale-led advantage in legacy molecules, e) minimal financial leverage, and f) sufficient cash available for new projects."

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