Divi's Laboratories Limited (DIVISLAB) AI Stock Analysis

• Market Cap: ₹1.66T
• Dividend Yield: 0.46%
• Average Volume (3M): 6.36K
• Price to Earnings (P/E): 67.0
• Beta (1Y): 0.88
• Revenue Growth: 16.43%
• EPS Growth: 35.35%
• Country: IN
• Employees: 9,741
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 21.98
• Shares Outstanding: 265,468,570
• 10 Day Avg. Volume: 6,055
• 30 Day Avg. Volume: 6,356
• PEG Ratio: 1.82
• Price to Book (P/B): 9.84
• Price to Sales (P/S): 15.74
• P/FCF Ratio: 290.01
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 97.52
• Revenue Forecast (FY): ₹106.19B

• Rating: 74 Outperform
• Price Target: ₹6,751.00 ▲(2.24% Upside)
• Action: Upgraded Date: 11/01/25
• Date: Action: Upgraded 11/01/25

Divi's Laboratories Limited has a strong financial foundation with impressive profitability and minimal leverage, which is the most significant factor in its score. The technical analysis indicates strong momentum but warns of potential overbought conditions. The high P/E ratio suggests overvaluation, which is a concern for valuation-focused investors.

Positive Factors

Balance Sheet Strength

Very low leverage and a high equity ratio provide financial flexibility to fund capex, absorb shocks, and pursue strategic opportunities. Strong ROE (14.6%) indicates effective use of shareholder capital, supporting durable creditworthiness and long-term investment capacity.

Profitability and Operational Efficiency

Consistently high and improving net margins reflect pricing power and efficient operations in API manufacturing. Sustainable profitability supports reinvestment in production and R&D, enabling continued competitiveness and resilience across multi-month planning horizons.

Diversified API Business Model

A mix of contract manufacturing, direct API sales, exports and strategic partnerships spreads customer and revenue risk. Combined with an R&D pipeline, this diversified model supports steady demand, repeat contracts and longer-term product-led growth across global markets.

Negative Factors

Free Cash Flow Volatility

Large swings in free cash flow reduce predictability of internally generated funds, complicating capital allocation and dividend planning. Even with strong operating cash flow coverage, inconsistent FCF can constrain durable funding for capex, M&A or shareholder returns.

Declining Gross Margin

A material drop in gross margin over time suggests rising input costs, adverse mix shifts, or pricing pressure in APIs. If persistent, margin erosion can weaken the company’s ability to sustain high net margins, invest in R&D, and maintain competitive differentiation long term.

Modest Recent Revenue Growth

Low single-digit recent revenue growth points to market maturation or near-term demand headwinds. With limited top-line expansion, maintaining elevated profitability and investing for future product expansion becomes more challenging without clear new product wins or share gains.

Divi's Laboratories Limited Business Overview & Revenue Model

Company Description

Divi's Laboratories Limited manufactures and sells generic active pharmaceutical ingredients (APIs) and intermediates, and nutraceutical ingredients in India, the United States, Asia, Europe, and internationally. It also undertakes custom synthesis of APIs and intermediates; and supplies a range of carotenoids, as well as markets vitamins to nutritional, pharma, food/beverage, and feed industries. The company was formerly known as Divi's Research Center and changed its name to Divi's Laboratories Limited in 1994. The company was incorporated in 1990 and is headquartered in Hyderabad, India.

How the Company Makes Money

Divi's Laboratories generates revenue primarily through the production and sale of APIs and pharmaceutical intermediates. The company operates on a business model that includes both contract manufacturing and direct sales, allowing it to serve a diverse clientele, including multinational pharmaceutical companies. Key revenue streams are derived from the supply of APIs for various therapeutic areas, as well as custom synthesis services offered to clients. Additionally, strategic partnerships with global pharmaceutical firms and a robust export market contribute significantly to its earnings. The company's focus on research and development ensures a steady pipeline of innovative products, further enhancing its revenue potential.

Divi's Laboratories Limited Financial Statement Overview

Summary

Divi's Laboratories Limited demonstrates robust financial health with strong profitability, minimal leverage, and efficient operations. The income statement and balance sheet are impressive, but the cash flow statement reveals some volatility in free cash flow growth, which could pose a risk if not managed carefully.

Income Statement

Divi's Laboratories Limited shows strong profitability with a consistent increase in net profit margin from 20.4% to 23.4% over the years. The gross profit margin remains robust, though it has slightly decreased from 66.3% to 34.1% in recent years. Revenue growth is positive at 3.1% for the latest period, indicating a stable upward trajectory. EBIT and EBITDA margins are healthy, reflecting efficient operations.

Balance Sheet

The company maintains an excellent balance sheet with a very low debt-to-equity ratio, indicating minimal leverage risk. Return on equity is strong at 14.6%, showcasing effective use of shareholder funds. The equity ratio is high, suggesting a solid financial structure with significant equity backing the assets.

Cash Flow

Operating cash flow is strong, with a good coverage ratio of 1.34. Free cash flow growth is volatile, showing 'Infinity' due to a significant increase from the previous period, but this may indicate potential instability. The free cash flow to net income ratio is moderate, suggesting room for improvement in converting income to cash.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	96.52B	93.58B	77.96B	77.49B	87.99B	68.58B
Gross Profit	53.72B	31.91B	45.27B	44.87B	57.07B	45.34B
EBITDA	34.67B	33.21B	25.43B	27.14B	39.97B	29.24B
Net Income	23.06B	21.91B	16.00B	18.24B	29.60B	19.84B
Balance Sheet
Total Assets	0.00	169.47B	154.70B	144.39B	133.75B	107.74B
Cash, Cash Equivalents and Short-Term Investments	35.27B	37.15B	37.01B	41.36B	27.42B	20.85B
Total Debt	0.00	40.00M	30.00M	44.90M	36.90M	48.30M
Total Liabilities	-149.69B	19.78B	18.99B	16.72B	16.47B	14.79B
Stockholders Equity	149.69B	149.69B	135.71B	127.67B	117.28B	92.95B
Cash Flow
Free Cash Flow	0.00	5.08B	2.58B	19.86B	11.99B	10.37B
Operating Cash Flow	0.00	19.46B	12.61B	24.59B	19.12B	19.47B
Investing Cash Flow	0.00	-10.99B	-2.69B	-27.07B	-21.95B	751.30M
Financing Cash Flow	0.00	-7.97B	-7.99B	-7.97B	-5.32B	-348.90M

Divi's Laboratories Limited Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 6603.05
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:DIVISLAB, the sentiment is Positive. The current price of 6603.05 is above the 20-day moving average (MA) of 6187.78, above the 50-day MA of 6279.30, and above the 200-day MA of 6378.96, indicating a bullish trend. The MACD of 23.26 indicates Negative momentum. The RSI at 57.64 is Neutral, neither overbought nor oversold. The STOCH value of 58.26 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IN:DIVISLAB.

Divi's Laboratories Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DIVISLAB	74 Outperform	₹1.66T	66.98	―	0.46%	16.43%	35.35%
LUPIN	72 Outperform	₹1.03T	22.13	―	0.57%	15.49%	64.37%
DRREDDY	70 Outperform	₹1.08T	19.15	―	0.63%	14.10%	9.72%
TORNTPHARM	66 Neutral	₹1.49T	65.52	―	0.84%	9.11%	18.76%
LAURUSLABS	66 Neutral	₹555.97B	65.90	―	0.15%	25.83%	421.20%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
SUVEN	43 Neutral	₹34.01B	-12.15	―	―	―	―

Divi's Laboratories Limited Corporate Events

Divi’s Laboratories Files SEBI Dematerialisation Compliance Certificate for December Quarter

Divi’s Laboratories Limited has submitted to the National Stock Exchange of India and BSE Limited the quarterly compliance certificate required under Regulation 74(5) of the SEBI (Depositories and Participants) Regulations, 2018 for the quarter ended December 31, 2025. The certificate, issued by its registrar and share transfer agent KFin Technologies Limited, confirms that all securities received for dematerialisation during the quarter were appropriately processed, either accepted or rejected, duly listed on the recognised stock exchanges, and that physical certificates were mutilated and cancelled with depositories recorded as registered owners within the prescribed 15-day period, underscoring the company’s adherence to regulatory and corporate governance standards in handling its share capital.

Divi’s Laboratories to Close Trading Window Ahead of Q3 FY26 Results

Divi’s Laboratories Limited has announced that it will close its trading window for designated persons, their immediate relatives, and insiders from 1 January 2026 until 48 hours after the company announces its unaudited financial results for the quarter and nine-month period ended 31 December 2025. The move is in line with SEBI’s Prohibition of Insider Trading Regulations and the company’s internal code of conduct, reinforcing its governance standards and compliance framework ahead of the upcoming financial disclosure, with the exact board meeting date for approving these results to be communicated later.