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Investing.com - HSBC has upgraded Divi’s Laboratories Ltd (NS:DIVI) from Reduce to Buy, while significantly raising its price target to INR7,900.00 from INR5,020.00.
The upgrade reflects HSBC’s more constructive view of growth potential for Divi’s custom synthesis segment, particularly noting the company’s role as a global supplier of peptide fragments used in Eli Lilly (NYSE:LLY)’s anti-obesity and anti-diabetes drug tirzepatide.
HSBC identified multiple growth drivers for Divi’s, including scale-up in supply for tirzepatide fragments, with the company currently qualified to supply two of the four peptide fragments needed for the drug.
Additional growth factors include a diversified client base for peptides, with Divi’s supplying protected amino-acids to clients like Roche and AbbVie (NYSE:ABBV), strong pick-up in supplies for contrast media, and continued traction in supplies for API for sacubitril valsartan.
HSBC projects a 24% revenue CAGR for Divi’s custom synthesis segment during FY25-28, which is expected to drive approximately 23% EPS CAGR for the company over the same period.
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