Divi’s Laboratories shares climb 3%; stock crosses Rs 1 lakh crore m-cap mark

Market

Shares of Divi’s Laboratories climbed over 3 percent in morning trade on BSE on December 17, crossing the Rs 1 lakh crore market-capitalisation mark.

The stock opened at Rs 3,719 on BSE against the previous close of Rs 3,719.45 and touched a high of Rs 3,847.90 in the trade so far.

At 1100 hours, the stock was at Rs 3,837.60, up 3.18 percent, on BSE.

The pharma sector has been among the top beneficiaries of the COVID-19 pandemic and the stock of Divi’s has been among the top performers of the pharma pack.

As of December 16 close, the stock has gained 101 percent in the year 2020 so far.

In early December, the company said it had earmarked Rs 1,500 crore to set up a new manufacturing facility in Andhra Pradesh.

The work on the manufacturing plant would commence from December 7, Divi”s Laboratories said in a regulatory filing.

The Unit-III facility will come up in the East Godavari District, Andhra Pradesh, it added.

The company will be investing about Rs 1,500 crore out of its internal accruals in a phased manner for the implementation of the plant, the drugmaker said.

The operations are likely to commence within 12 to 18 months for the first phase of the project, it added.

All the requisite licenses have been granted by the central and Andhra Pradesh government for implementation of the project, the company said

Brokerage firm Sharekhan has a ‘buy’ call on the stock with a target price of Rs 4,175.

Sharekhan believes Divi’s could also benefit from backward-integration initiatives.

“Divis Laboratories Limited (Divis) is witnessing strong demand in both the API as well as custom synthesis businesses. Divis is in the midst of a massive capacity expansion plan. In addition to the earlier CAPEX plan of Rs 1800 crore, it shall be investing Rs 400 crore in the custom synthesis business,” Sharekhan said.

Divi’s Laboratories’ net profit in the second quarter of fiscal 2021 rose 45.6 percent to Rs 519.6 crore from Rs 356.78 crore in the year-ago quarter.

The consolidated total income of the company during the quarter increased to Rs 1,762.94 crore from Rs 1,492.60 crore, YoY.

The company said it had near-normal operations during the quarter.

Written by Rakesh Sashmal