Is 2026 a turning point for Divis Laboratories? Here’s what Citi says about the pharma stock

Synopsis: Divis Laboratories is in focus after CITI expects its share price to rise by another 44% on the back of new launches and an expected recovery in its generic business in 2026.

The shares of this pharma stock, engaged in the manufacturing and exporting of API’s and Nutraceutical ingredients, are in focus after leading global brokerage, CITI, has expressed its bullishness over the business, citing numerous upticks. In this article, we will dive more into the details.

With a market capitalisation of Rs 1,68,586 crore, the shares of Divis Laboratories Ltd closed at Rs 6,350.50 per share, down by 1.3 percent from its previous day’s closing price of Rs 6,433.70 per share. Over the past five years, the stock has delivered a return of 74 percent, almost similar to NIFTY 50’s return of 78 percent.

Analyst Comments

Leading global brokerage, CITI, has assigned a Buy call on Divis Laboratories and has fixed a target price of Rs 9,140 per share, signalling an upside potential of 44 percent from its current market price of Rs 6,350.50 per share, making it the highest target assigned by any brokerage on the company after Jefferies target of Rs 7,850 per share.

According to Citi’s analysts, Divi’s Laboratories should reach a turning point in 2026 as a result of multiple major catalysts expected to occur at about the same time. 

The leading catalyst for Divi is the expected entry into the market of GLP-1 drugs, which are indicated for treating both diabetes and obesity. Specifically, the two most important GLP-1 molecules, Tirzepatide and Orforglipron, will likely begin having an impact in 2026, with Tirzepatide entering the market in H1 2026 and Orforglipron following shortly thereafter in H2 2026. Citi believes that these two molecules present Divi with massive and long-term areas of opportunity in the coming months.

In addition to GLP-1 drugs, Citi sees Divi benefiting from increased revenues associated with contrast media products such as Iohexol and growing Iopromide capacity. Citi also indicated that a number of custom synthesis projects are progressing and should start generating revenue in the near term. 

Lastly, while the generic API (active pharmaceutical ingredient) business has historically been weak for Divi, it is expected that 2026 will see an overall recovery in the generic API business due to an influx of new opportunities created by the loss of patent exclusivity (expiry) on a number of medications.

While Citi cautioned that revenue may continue to be volatile on an individual quarterly basis due to Divi being a B2B business, it expects that the long-term revenue trend will be upward. Also, Citi expects Divi’s EBITDA growth between FY25 and FY30 to triple or even quadruple, where the brokerage EPS estimates are 10-18 percent higher for FY27-28 respectively, than the market estimates.

Divi’s Laboratories Limited is one of the top Indian pharmaceutical firms that produces and markets generic active pharmaceutical ingredients (APIs), intermediates, and nutraceuticals worldwide. It also offers custom synthesis and contract manufacturing services. Divi’s has a robust overseas presence, with exports to countries in North America, Europe, Asia, and others.

The revenue from operations for Divis Laboratories stands at Rs 2,715 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 2,338 crores, up by about 16 per cent YoY. Additionally, on a QoQ basis, it reported a growth of 13 percent from Rs 2,410 crore. 

Coming down to its profitability, the company’s net profit stood at Rs 689 crore in Q2 FY26, up from Rs 510 crore in Q2 FY25, which is a growth of 35 percent YoY. Additionally, on a QoQ basis, it reported a net profit of Rs 545 crore, which is a growth of 26 percent.

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