Divi’s Laboratories Limited (NSE:DIVISLAB) just released its second-quarter report and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 15% higher than the analysts had forecast, at ₹37b, while EPS were ₹42.49 beating analyst models by 36%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Divi’s Laboratories’ 28 analysts is for revenues of ₹134.2b in 2027. This would reflect a meaningful 10% increase on its revenue over the past 12 months. Per-share earnings are expected to increase 5.2% to ₹133. Before this earnings report, the analysts had been forecasting revenues of ₹126.2b and earnings per share (EPS) of ₹123 in 2027. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
See our latest analysis for Divi’s Laboratories
With these upgrades, we’re not surprised to see that the analysts have lifted their price target 13% to ₹9,695per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Divi’s Laboratories, with the most bullish analyst valuing it at ₹15,100 and the most bearish at ₹6,500 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Divi’s Laboratories’ growth to accelerate, with the forecast 21% annualised growth to the end of 2027 ranking favourably alongside historical growth of 7.1% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 18% per year. Divi’s Laboratories is expected to grow at about the same rate as its industry, so it’s not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Divi’s Laboratories’ earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that Divi’s Laboratories will grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn’t be too quick to come to a conclusion on Divi’s Laboratories. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Divi’s Laboratories analysts – going out to 2029, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we’ve spotted with Divi’s Laboratories .
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