Expensive valuations may limit upside for Divi's Laboratories stock

Despite strong custom synthesis growth and better-than-expected quarterly results, analysts caution that high valuations could restrict near-term gains for Divi's Laboratories

The stock of the country’s second largest pharma company by market capitalisation, Divi’s Laboratories, lost 2.4 per cent since its results last week. While the performance of the pharma firm for the second quarter (July-September) of 2025-26 (Q2FY26) was better than estimates, valuations are in the expensive zone. At the current price, the stock trades at about 60 times its FY27 earnings estimates. 

Revenues in the quarter were up 16 per cent year-on-year (Y-o-Y) and 12.7 per cent sequentially. The gains were led by custom synthesis (CS), which was up 28.7 per cent. The segment accounted for 56 per cent