Divi's Labs shares fall 3% on Q3 earnings miss; brokerages split on outlook

Divi's Laboratories reported a consolidated profit after tax (PAT) of ₹583 crore, marginally lower than ₹589 crore in the same period last year

Divi's Laboratories share price today: Shares of pharmaceutical major Divi's Laboratories declined nearly 3 per cent to hit an intraday low of ₹6,201.5 on Thursday, February 12, 2026, in a subdued broader market, after the company reported revenue and profit for the October-December quarter of fiscal 2026 (Q3FY26) that fell short of market expectations. However, its operating performance and margins surpassed estimates.

 

Around 11:45 AM, Divi's share price was trading 2.6 per cent lower at ₹6,222.5 compared to the previous session's close of ₹6,386.5 on the NSE. In comparison, the NSE Nifty50 was trading at 25,828 levels, down by 126 points or 0.5 per cent. The market capitalisation of the company stood at ₹1,65,652.39 crore. The stock has fallen around 12 per cent from the 52-week high of ₹7,071 touched on July 8, 2025.

 

Divi's Laboratories Q3FY26 performance

In the Q3FY26, the company reported a consolidated profit after tax (PAT) of ₹583 crore, marginally lower than ₹589 crore in the same period last year. However, the company's total income rose 12.11 per cent to ₹2,692 crore from ₹2,40 crore in the corresponding quarter of the previous fiscal.

 

Additionally, the company reported an exceptional loss of ₹74 crore due to the impact of new labour codes. 

 

Divi's reported earnings before interest, tax, depreciation, and amortisation (Ebitda) of ₹890 crore, up 19.8 per cent from ₹43 crore in Q3FY25. Ebitda margin expanded to 34.2 per cent from 32 per cent in the year-ago period. 

 

According to the management, operational metrics improved during the quarter despite near-term revenue softness and indicated that growth drivers remain intact.   Check Q3 Results today

Here's what brokerages say

Overall, brokerages acknowledged the steady operational performance but are divided on growth visibility and valuations.

 

According to analysts at JM Financial, while revenue missed its estimates by around 4 per cent, Ebitda was broadly in line, aided by margins of 34 per cent. The brokerage highlighted the Custom Synthesis (CDMO) segment as the key growth driver, hitting 23 per cent YoY growth, even as the Generic Active Pharmaceutical Ingredients (APIs) business declined 4 per cent amid persistent pricing pressure. It expects the pricing headwinds in generics to bottom out during the year.

 

Additionally, JM Financial highlighted multiple triggers in the Contract Development and Manufacturing Organisation (CDMO) business, including commercialisation of two new contracts, ramp-up of GLP-1 projects and traction in contrast media. Analysts believe Divi’s remains a structural beneficiary of global supply diversification in the CDMO space. It has maintained a 'Buy' rating with a target price of ₹8,037, valuing the stock at 38x EV/Ebitda.

 

Motilal Oswal Financial Services (MOFSL), on the other hand, outlined the sharp improvement in gross margins, which at 63.7 per cent marked the highest quarterly level in five years. The brokerage attributed this to a favourable product mix and currency benefits. It also noted that deeper backward integration is helping the company defend profitability even as pricing pressure persists in parts of the portfolio. However, citing limited upside at current valuations, it maintained a 'Neutral' rating with a target price of ₹6,925.

 

The brokerage expects revenue, Ebitda, and PAT to clock a CAGR of 18 per cent, 20 per cent and 21 per cent, respectively, over FY26–FY28.

 

Analysts at Elara Capital took a more cautious view on growth sustainability. While PAT was in line with its estimates due to a lower tax rate, the brokerage pointed out that US dollar revenue growth moderated during the quarter, with rupee depreciation supporting reported numbers. It expects growth to normalise to around 10–11 per cent in the medium term and flagged elevated valuations as a concern. 

 

"Narratives around China + 1 and GLP-1 have kept high growth expectations alive and taken the stock valuation beyond reasonable levels," the brokerage said in its note.

 

The brokerage has raised its FY26E–FY28E core EPS estimates by 1–3 per cent, factoring in the benefit of INR depreciation. It noted that the stock is currently trading at 59.5x FY27E core P/E. Elara reiterated a 'Sell' rating with a target price of ₹4,486, though it sees any large custom synthesis win as a potential upside risk.

  Disclaimer: The views or investment tips expressed by the brokerages in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.