Can Divi's maintain its premium valuation amid headwinds?

Synopsis

Indian pharma companies have been struggling to maintain margins because of strong headwinds. Due to increased competition, pharma companies are experiencing price erosion in the market, resulting in sluggish growth. While price erosion is not the only issue at hand, China’s lockdown that caused supply chain disruption, the rise in raw material prices, and the Russia-Ukraine war have raised packaging costs.

Years of getting premium valuations, pharma companies’ stocks are facing reality checks. Divi’s Laboratories was able to manage the business challenges. But will valuation headwinds finally hit the stock now or will its business model be able to deliver growth that will help the stock maintain its premium?Indian pharma companies have been struggling to maintain margins because of strong headwinds. Due to increased competition, pharma companies

BY

Gaurav Jain & Parimal Ade

ET CONTRIBUTORS

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