InvestorQ : Why did Divi’s Labs stock fall despite such good numbers?
Tisha Malhotra made post

Why did Divi’s Labs stock fall despite such good numbers?

Aashna Tripathi answered.
1 year ago

India’s largest manufacturer of active pharma ingredients (API) and one of the leading API manufacturers in the world, Divi’s Laboratories, hit a 52-week low of Rs3,708. It is surprising that the stock has lost close to 15% in a span of just 2 days after the results. The real surprise is that the stock prices have cracked despite rather positive profit growth of 78% reported by Divi’s Laboratories for the March 2022 quarter. Revenues were also higher.

The correction in the stock has been explained in a note by Motilal Oswal which has cut the EPS estimates by 12-14% for Divi. According to the report, the immediate headwinds for Divi are the reduced sales of COVID-related products due to the cessation of the COVID focus. In addition, there has also been a delay in implementation of the Kakinada project. These concerns caused the stock to fall. However, the Board had recommended a dividend of Rs30 per share or 1,500% on face value, and is subject to shareholder approval.