Pharma Stock to Buy Now for an Upside of 29%; Recommended by Citi

Synopsis: Citi maintained a Buy rating on Divi’s Laboratories with a ₹9,450 target, citing capacity expansion, new product launches, and strong long-term earnings growth.

This Large-Cap Pharma Stock, engaged in the manufacturing of active pharmaceutical ingredients (APIs), intermediates, nutraceutical ingredients, and custom synthesis products for global pharmaceutical companies, jumped 1.95 percent after Citi gave a Buy target of Rs. 9,450, which has an upside potential of 29.36 percent.

With a market capitalization of Rs. 1,93,547.83 crores, the share of Divis Laboratories Limited has reached an intraday high of Rs. 7,325 per equity share, rising nearly 1.95 percent from its previous day’s close price of Rs. 7,185.20. Since then, the stock has retreated and is currently trading at Rs. 7,305 per equity share. 

What is the News?

Citi, a prominent brokerage firm, has recommended a “Buy” call on Divis Laboratories Limited with a target price of Rs. 9,450 per share, indicating an upside potential of 29.36 percent from its current price of Rs. 7,305 per share. 

Citigroup has maintained its Buy rating on Divi’s Laboratories, saying the company is entering an important growth phase. According to the brokerage, the next 12–15 months could be crucial as Divi’s moves closer to commercializing several new products. It expects supplies for GLP-1-related products to begin in FY27, while products such as Enlicitide and Icotrokinra could start contributing from calendar year 2027.

The brokerage also believes market concerns over the impact of Entresto are excessive. Divi’s ongoing capacity expansion indicates that the company is preparing to become a global leader in manufacturing active pharmaceutical ingredients (APIs) for these high-growth therapies. This expansion is expected to strengthen its long-term growth prospects.

Citi believes Divi’s offers strong earnings visibility supported by its expanding product pipeline and manufacturing capabilities. Despite these strengths, the stock continues to trade at a discount compared with several smaller Indian CDMO companies. The brokerage sees this valuation gap as unjustified and believes improving growth prospects could support a higher valuation over time.

Export Revenue

Divi’s Laboratories Limited generates a significant share of its business from international markets, with around 89 percent of its revenue coming from exports. Europe and the United States together contribute about 74 percent of the company’s export revenue, highlighting its strong presence in key global pharmaceutical markets. 

In FY26, the company’s business mix consisted of 45 percent from generic products and 55 percent from Custom Synthesis (CS), reflecting a balanced portfolio and strong demand from global pharmaceutical customers.

Manufacturing and Global Presence

Divis Laboratories Limited operates major manufacturing facilities in India, including sites near Hyderabad, Visakhapatnam, and Kakinada. Its Visakhapatnam facility is described by the company as the world’s largest API manufacturing facility, and its products are exported extensively to regulated markets such as the United States and Europe.

Company Overview

Divi’s Laboratories Limited is an Indian multinational pharmaceutical company that specializes in the manufacture of active pharmaceutical ingredients (APIs), pharmaceutical intermediates, nutraceutical ingredients, and custom synthesis services for global drug companies. Founded in 1990 and headquartered in Hyderabad, Telangana, it has become one of India’s leading pharmaceutical manufacturers and a major supplier to regulated markets worldwide.

Recent Quarter Results

Coming into financial highlights, Divis Laboratories Limited’s revenue has increased from Rs. 2,585 crore in Q4 FY25 to Rs. 2,831 crore in Q4 FY26, which has grown by 9.52 percent. The net profit has also grown by 13.44 percent from Rs. 662 crore in Q4 FY25 to Rs. 751 crore in Q4 FY26. Divis Laboratories Limited’s revenue and net profit have grown at a CAGR of 11 percent and 13 percent, respectively, over the last three years.

In terms of return ratios, the company’s ROCE and ROE stand at 22 percent and 16.5 percent, respectively. Divis Laboratories Limited has an earnings per share (EPS) of Rs. 96.7, and its almost debt-free company.

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