MOSL: DIVI'S LABORATORIES (Neutral)-Unit-2 receives import alert-key products exempted
​Divi's Laboratories: Unit-2 receives import alert; key products exempted; Regulatory uncertainty to keep stock price range-bound in near term
(DIVI IN, Mkt Cap USD2.5b, INR634, TP INR600, 5% Downside, Neutral)
- US FDA has issued an import alert on DIVI’s Visakhapatnam-based plant, Unit-2. However, it has exempted nine products including Naproxen and Gabapentin from the import alert list.
- US FDA had inspected Unit-2 for eight days from November 29 to December 06, 2016, following which it issued Form-483 with five observations to DIVI. The observation letter highlighted instances of disregard of unknown impurities without specific justification and sighting of unexplained colored products at various stages of API manufacturing.
- We expect the stock to remain range-bound till further clarity emerges on these 483 observations. We have cut our EPS estimates for FY18/19 by 22-23%. Maintain Neutral.
Divi's Laboratories is a manufacturer of Active Pharmaceutical Ingredients and Intermediates. The major portion of its turnover is on account of export of its products to European and American countries. Co.'s product portfolio comprises two segments i) Generic APIs (active pharma ingredients) and Nutraceuticals and ii) Custom Synthesis of APIs, intermediates and specialty ingredients for innovator pharma giants. Co. has two Subsidiaries viz., Divis Laboratories (USA) Inc., and Divis Laboratories Europe AG looking after manufacturing and marketing of Neutraceutical products in North American and European Countries.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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