Divi’s Laboratories shares gain 6% after JPMorgan upgrade; Goldman raises earnings estimates after strong Q2

Shares of Divi’s Laboratories Ltd. were trading with gains of 6% on Monday, November 9, after the pharmaceutical company reported a strong set of September quarter (Q2FY27) results, with revenue, earnings and margins beating analyst estimates.

The company’s consolidated net profit rose 64% year-on-year to ₹1,127 crore in Q2FY27, compared with ₹689 crore in the corresponding quarter of the previous fiscal year.

Consolidated revenue from operations increased 35.4% year-on-year to ₹3,676 crore from ₹2,715 crore in Q2FY26.

Earnings before interest, tax, depreciation and amortisation (EBITDA) surged 76% year-on-year to ₹1,566 crore, compared with ₹888 crore in the year-ago quarter. EBITDA margin expanded to 42.6% from 32.7% in Q2FY26.

The strong performance was supported by robust traction in the generics and custom synthesis (CS) businesses, alongside currency tailwinds. The company also benefited from opportunities in the GLP-1 segment.

What brokerages are saying

Goldman Sachs has a ‘Buy’ rating on Divi’s Laboratories, with a price target of ₹11,700 per share. The brokerage said the company’s revenue and EBITDA grew 35% and 76% year-on-year, respectively, in Q2FY27, exceeding its estimates and broader market expectations.

Revenue growth was primarily driven by the custom synthesis (CS) segment, which expanded 54% year-on-year, ahead of the brokerage’s estimate of 34% growth. The generics business also reported an improvement, growing 12% year-on-year against Goldman’s estimate of 4%, supported by healthy volume growth despite continued pricing pressure in certain product categories.

EBITDA margin came in at 42.6%, expanding 989 basis points year-on-year and exceeding Goldman Sachs’ estimate by 535 basis points. The improvement was driven by a favourable business mix, with a higher contribution from custom synthesis, backward integration benefits at Unit 3, and operating leverage.

Following the stronger-than-expected Q2 performance, Goldman Sachs has raised its FY27–FY29 earnings per share (EPS) estimates by up to 17%.

Meanwhile, JPMorgan has an ‘Overweight’ rating on Divi’s Laboratories and has raised its price target to ₹12,500 per share.

The brokerage said the company delivered a strong Q2FY27 performance, with revenue and EBITDA growing 35% and 76% year-on-year, respectively, and beating consensus estimates by 15% and 33%. Growth was led by the custom synthesis business, which expanded 54% year-on-year, supported by continued supplies from validation batches.

Looking ahead, JPMorgan expects the conversion of validation-stage projects into commercialisation to be a key growth driver. Of the three dedicated programmes, one is nearing commercialisation, while the other two are expected to progress over the next few quarters, subject to customer qualification and regulatory clearances.

The brokerage also highlighted the company’s plans to scale up its peptides business through the addition of multi-tonne capacity, using multiple 3,000-litre solid-phase peptide synthesis (SPPS) reactors. Divi’s Laboratories is targeting a position among the top three integrated global players in peptides.

For context, JPMorgan noted that WuXi AppTec, the largest player in the peptides market, has a capacity of more than 100 kilolitres and has targeted TIDES revenue of $2.5 billion in CY26, highlighting the scale of the opportunity.

Against this backdrop, JPMorgan has raised its FY27–FY29 earnings estimates by 18–30%.

Motilal Oswal has reiterated its ‘Neutral’ rating on Divi’s Laboratories, while retaining a price target of ₹11,110.

The brokerage said the company delivered a strong beat in Q2FY27, with revenue, EBITDA and net profit exceeding its estimates by 19%, 33% and 33%, respectively. It added that strong growth in both generics and custom synthesis, supported by favourable currency movements, drove the improvement in overall performance.

Motilal Oswal noted that Divi’s Laboratories reported its highest-ever quarterly revenue, EBITDA and net profit in Q2FY27.

Following the strong results, the brokerage has raised its earnings estimates by 21% and 19% for FY27 and FY28, respectively. The revisions factor in an increased contribution from projects progressing towards validation and commercialisation, an improved outlook for the generics and nutraceuticals segments, and better operating leverage.

The brokerage expects Divi’s Laboratories to deliver a compound annual growth rate (CAGR) of 23% in revenue, 34% in EBITDA and 33% in net profit over FY26–FY28.

Motilal Oswal said the company is well-positioned to secure business in the custom synthesis segment, given its scientific capabilities across peptides, contrast media and generics, large-scale commercial manufacturing capabilities, and efficient supply chain management.

However, the brokerage believes the stock’s valuation offers limited upside from current levels. It values the company at 65 times its 12-month forward earnings to arrive at the price target of ₹11,110.

Of the 32 analysts tracking Divi’s Laboratories, 20 have a ‘Buy’ rating, four have a ‘Hold’ rating, and eight have a ‘Sell’ recommendation on the stock.

Divi’s Laboratories shares ended 9.43% higher at ₹11,097 on Friday. The stock has gained around 75% so far in 2026, while rising nearly 65% over the past six months.