Divi's Labs: New capex, margin expansion to support earnings growth

Brokerages expect the company's net profits to grow by 30 per cent annually over FY20-23

With gains of 51 per cent, Divi’s Laboratories (Divi’s) has been the best-performing large-cap pharmaceutical stock over the past six months. It hit its all-time high earlier this week, and is within touching distance of the Rs 1-trillion mark. If it tops that, it will be the second company to cross that mark, after Sun Pharmaceutical Industries. 

The recent trigger for the stock has been an earnings upgrade, led by strong margin performance and revenue visibility, on the back of additional capital expenditure (capex). While the second-quarter (Q2) results were ahead of expectations, it was the new capacity expansions announ­ced by