Shares of Divis Laboratories fell more than 9 percent intraday on August 13 as global brokerage HSBC downgraded the stock and cut price target after its June quarter earnings fell short of analysts’ expectations.
The stock was quoting at Rs 1,569, down Rs 96.50, or 5.79 percent, on the BSE at 1333 IST. The stock has it rallied 40 percent in the last one year.
Profit in Q1 grew by 1.8 percent to Rs 272.44 crore and revenue increased by 17 percent to Rs 1,163 crore compared to year-ago. On sequential basis, profit fell 6.7 percent and revenue declined 8.2 percent.
Earnings before interest, tax, depreciation and amortisation (EBITDA) climbed nearly 10 percent to Rs 387 crore and margin contracted 212bps year on year to 33.3 percent in quarter ended June 2019.
Numbers missed analysts’ expectations on all parameters. Edelweiss estimated profit at Rs 350.3 crore on revenue of Rs 1,244 crore and EBITDA at Rs 472.5 crore, with margin at 37.98 percent for the quarter.
HSBC downgraded the stock to hold from buy call and also slashed price to Rs 1,670 from Rs 1,760.
“Revenue declined sequentially on ongoing supplies issues in Q1. Start of supplies from expanded capacity will be crucial to realise operating leverage,” it said.
Motilal Oswal maintained its neutral call on the stock, with a target price at Rs 1,590 as it lowered earnings estimates by 3 percent for FY20/21 to factor in higher raw material costs over medium term.
“It is well placed to benefit from CRAMS opportunity. Compliance issues are behind which provides certainty for earnings growth,” it said.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.
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