Divi’s Laboratories Limited was established in the year 1990 with Research & Development as its prime fundamental activities. Divis Laboratories focused on developing new processes for the production of Active Pharma Ingredients (APIs) & Intermediates. The company expanded its activities to provide complete solutions provider to the domestic Indian pharmaceutical industry. The company established its first manufacturing facility in 1995. The plant was built on a 500 acre site at Hyderabad (Unit-I) comprises of 13 multi-purpose production blocks. Later in 2002, Company set up its second manufacturing facility at Visakhapatnam (Unit- II) with 14 multipurpose production blocks. Both the facilities are mainly engaged in the manufacture of - Active Pharmaceutical Ingredients (APIs) & Intermediates for Generics, Custom Synthesis of API's and Advanced intermediates for discovery compounds for pharma giants, Building blocks for Peptides, Building blocks for Nucleotides, Carotenoids, Chiral ligands etc.

Products & Services—

Divi’s undertakes FTE/Contract Research on process development for discovering new compounds for leading MNCs across the world and partners with them for the supply of APIs. The company is global in its outlook and benchmarks its quality standards to the best in the world.

Generics- Divis manufacture API's for the Generics. Divis is actively involved in developing alternate, patent non-infringing processes for APIs, for the inventors to manage late life cycle and leading generic drug manufacturers.

Intermediates- Divis supplies advanced intermediates for generic APIs that are already out of patent, as also for APIs which are about to enter into generic soon. Divis has tie-ups with both original inventors and generic API manufacturers.

Protected Amino Acids- Divis has built up a strong base in the manufacture of BOC, FMOC and CBZ protected amino acids, the protecting reagents themselves, peptide condensing agents, totally synthetic, natural and novel unnatural amino-acids and oligopeptides. Divis has invested heavily in knowledge, equipment and man-power to expand in this area. Currently, Divis is a major manufacturer of protected amino-acids.

Chiral Synthesis- Divis has an established and proven expertise in stereo selective synthesis using chiral ligands, high yield resolutions using chirally active resolving agents, recovery of resolving agents and ligands, recycling of undesirable isomers, resolutions involving enzymes and manufacture of novel ligands like binol, binap etc.

Carotenoids (Synthetic) and Nutraceuticals- Divis has succeeded in developing multistep total synthesis of important carotenoids like Apocarotenal, Betacarotene, Lycopene, Astaxanthin, Canthaxanthin etc

Financials—

Divis Laboratories has posted a net profit of Rs 106.05 million for the quarter ended Sept. 30, 2011 as compared to Rs 72.96 million for the quarter ended Sept. 30, 2010, representing increase of 45.35%.

Valuation & conclusion—

We expect company’s revenue to grow at a CAGR of 20% for next 3 years. At current market price stock is trading at 14.5 P/E multiple of its FY2013 estimated earnings. We recommend investors “Strong Buy” on “Divis Laboratories Limited” with medium to long term investment horizon.