Lack of valuation comfort may limit gains in Divi's Laboratories stock

Revenue growth prospects, however, remain strong driven by multiple factors

The stock of India’s second largest pharma company by market capitalisation, Divi’s Laboratories was down a tad on Monday despite better than expected operating performance. The flattish stock performance was on account of expensive valuations and worries of whether margins are peaking out. 

At the current price, the stock is trading at over 40 times its FY23 estimates and factors in most of the near term upsides. While valuations are at a 75 per cent premium to the NSE Pharma index, they are also at a sharp premium to its own 5-year averages. Rahul Jeewani of IIFL Securities expects the