Daijiworld Media Network - Mumbai

Mumbai, Jul 8: HSBC Global Research has upgraded Divi's Laboratories Ltd. from a ‘reduce’ to a ‘buy’ rating, citing strong growth potential driven by the company’s role in the production of the anti-diabetes drug tirzepatide, other peptides, and contrast media. The brokerage also raised its target price to Rs 7,900 from Rs 5,020, signaling a 14.4% upside potential.

Analysts at HSBC expect Divi’s to generate around $450 million in revenue from peptides and $260 million from contrast media by 2030, underscoring a bullish long-term outlook.

“The market is optimistic about Divi’s emerging as a global supplier of peptide fragments for Eli Lilly’s anti-obesity and anti-diabetes drug tirzepatide,” HSBC said. The report also noted a sharp improvement in sentiment for the company’s custom synthesis (CS) segment, fueled by multiple growth drivers.

These include the scale-up of tirzepatide fragment supply, a diversified peptide client base, and a rise in contrast media deliveries. According to HSBC, peptides contributed approximately $18–20 million in FY25, accounting for about 3.3% of the company’s custom synthesis revenue. This number is expected to grow significantly as supplies of tirzepatide and protected amino acids increase.

“With enhanced capabilities, Divi’s is well-positioned to win API supply contracts for clinical trials and commercial production,” the report stated.

However, HSBC also flagged some risks. These include the potential launch of generic versions of Entresto and supply disruptions if Eli Lilly completes its own API manufacturing expansion by 2026, potentially reducing external dependency.

Despite the risks, the overall outlook remains strong, with Divi’s Laboratories poised for a robust growth phase across key therapeutic segments.