Divi's Laboratories Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

A week ago, Divi's Laboratories Limited (NSE:DIVISLAB) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Divi's Laboratories delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting ₹31b-12% above indicated-and₹33.95-45% above forecasts- respectively Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Divi's Laboratories after the latest results.

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Following the latest results, Divi's Laboratories' 29 analysts are now forecasting revenues of ₹125.0b in 2027. This would be a notable 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to swell 10% to ₹121. In the lead-up to this report, the analysts had been modelling revenues of ₹122.5b and earnings per share (EPS) of ₹113 in 2027. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

Check out our latest analysis for Divi's Laboratories

With these upgrades, we're not surprised to see that the analysts have lifted their price target 13% to ₹7,979per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Divi's Laboratories, with the most bullish analyst valuing it at ₹11,700 and the most bearish at ₹6,000 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Divi's Laboratories' growth to accelerate, with the forecast 15% annualised growth to the end of 2027 ranking favourably alongside historical growth of 6.2% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 17% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Divi's Laboratories is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Divi's Laboratories following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Divi's Laboratories analysts - going out to 2029, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Divi's Laboratories that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.