Nuvama Institutional Equities retained its ‘Buy’ call on Divi’s Laboratories. The brokerage has a target price of Rs 7,110 on the stock, implying an upside of almost 15% from current levels.
Nuvama on Divi’s Lab: Eli Lilly brings big opportunity
Divi’s Laboratories has a big opportunity as Eli Lilly is poised to submit Orforglipron for regulatory approval after the recent successful trial results for its oral GLP-1. The drug would be launched globally, paving the way for a part of the 1 billion global obese population to benefit from the drug.
You would wonder that the drug is from Eli Lilly, then how come Divi’s Laboratories will benefit? Divi’s Laboratories serves as a significant partner to Eli Lilly, primarily functioning as a key supplier of peptide fragments and intermediates for Eli Lilly’s anti-obesity and anti-diabetes drugs, such as tirzepatide and the upcoming oral GLP-1 candidate orforglipron.
Nuvama on Divi’s Lab: Working on Orforglipron ingredients
Nuvama thinks that Divi’s Lab is working on 2–3 Orforglipron ingredients. The company has set up a small capacity, which can post multi-fold expansion in future.
The brokerage expects that contract manufacturing organisations (CMOs) have a $500 million–1 billion peak opportunity.
As injectable GLP-1s are expensive and cannot reach the masses, oral GLP-1 represents a huge opportunity to serve the global population. In this backdrop, Orforglipron is a key drug with peak sales estimated in the range of $15–40 billion.
Nuvama on Divi’s Lab: Revenue can peak up to $300 million
Nuvama forecasted that Divi’s Lab’s current capacity shall add $60 million in revenue, but at peak, can be scaled up to $200–300 million. The report stated that this opportunity can possibly start after the second half of FY26, but it should be noted that the opportunity size and timing cannot be accurately forecast.
Divi’s Laboratories stock performance
The share price of Divi’s Laboratories has risen 0.3% in the past five trading sessions. The stock has fallen 7% in the last one month. However, the stock has given a return of 12% in the past six months and 22% in the last one year.