Monday 10 November 2008

Buy Divi's Labs; target Rs 1500: Motilal Oswal

Motilal Oswal has recommended a buy rating on Divis Laboratories, with price target of Rs 1500, in its report dated October 31, 2008. "We expects the company to deliver consistent RoCE of over 40% for the next two years. We expect pharmaceutical outsourcing to gain traction in coming years, with the top-5 players likely to gain a disproportionate share of the CRAMS business initially. We expect Divi’s to be one of the key beneficiaries of increased pharmaceutical outsourcing from India. The company’s existing relationships with innovator companies should help it to procure more MNC contracts. Based on our revised estimates, we expect 35% earnings CAGR for the FY08-10 period led by increased traction in the CRAMS business. Divi’s is currently valued at 14.4x FY09E and 11.1x FY10E core earnings. We reiterate Buy with a price target of Rs 1,500 (15x FY10E earnings) an upside of 37%," says Motilal Oswal's report.

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Source: Moneycontrol

Posted by Harsh at 12:39

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