Divis Laboratories Ltd - Best play for depreciating INR - Maintain buy - Emkay

Reco: BUY
CMP: Rs 1122
Target Price: Rs 1250

- Divi's Q1FY13 Results - (a) Revenue at Rs4.7bn (up 30% YoY); (b) EBIDTA at Rs1.9bn (up 46% YoY) & (c) APAT at Rs1.44bn (up 40% YoY).

- Strong performance was aided by ramp-up in new capacity at Vizag and favorable currency. Carotenoids contributed Rs210mn to the top-line.

- Gross margins expanded 550bps YoY to 66% due to INR depreciation benefit. EBITDA margins at 40.8% expanded 450bps YoY & 54bps QoQ.

- Divi's is the best play on rupee depreciation in the Indian pharma space as it has 90% exports. Maintain Buy with a revised target price of Rs1250 (22XFY14 EPS of Rs57).

Source : Equity Bulls

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