Divi's Labs shares jump 4% to hit new high on strong Q4

The company benefited from a low base in the year-ago quarter which was hit by the COVID-19-led national lockdown. However, the company's earnings showed strong traction in 2020-21 due to a surge in demand for bulk drugs caused by the pandemic.

The board has recommended a dividend of Rs 20 (i.e. 1,000 percent) per equity share of the face value of Rs 2 each for the financial year 2020-21 (FY21).

"During the financial year 2020-21, the company has capitalised assets of around Rs 1,18,351 lakhs, and an amount of around Rs 71,062 lakhs is carried forward as capital work-in-progress at the end of the year," the company said.

It took a capacity expansion with an estimated investment of Rs 400 crore for fast-tracking a customs synthesis (CS) project. A part of the project has been completed and became operational, it said, adding that the rest of the plan will be completed during the early part of the next financial year.

Brokerages are bullish on the stock after the results. Jefferies and Goldman Sachs have 'buy' calls on the stocks.

According to GS, Q4 results beat analysts' estimates. It said that multiple drivers are likely to support business in FY22. The brokerage also noted that the company gained market share on molecules like Carbidopa, Levodopa, Valsartan, Mesalamin.

The brokerage has raised the target price to Rs 4,530 per share from Rs 4,440 per share.

Brokerage Motilal Oswal Financial Services raised its FY22/FY23 EPS estimates for the stock by 4 percent each to reflect scale-up in projects, enhanced capacity for APIs in the generics segment and better profitability on account of backward integration.

Jefferies also raised the target to Rs 4,732 per share, while maintaining a 'buy' call.