Choke in API supplies from China creates huge opportunity for Divi's Labs

Niche capabilities and absence of regulatory overhangs are other key positives

Divi’s Laboratories has been consistently gaining and is up more than 39 per cent since August lows. Trading near its 52-week high now, the company’s stock has not only outperformed the healthcare index but the leading indices as well. The reason: in the pharmaceuticals space, while Divi’s remains better placed compared to many peers due to good growth and absence of regulatory overhang, it will also benefit from the expected API (Active Pharma Ingredients) supply constraints from China due to coronavirus outbreak, as it is a leading maker of this raw material.

The API segment contributes about half the firm's