The share price of Divi's Laboratories hit a record high in the early trade on Monday after the company reported strong earnings for the quarter ended September 2020.

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The stock jumped as much as 6 percent to a fresh high of Rs 3,432.70 apiece on the BSE.

Divi's Laboratories’ net profit in the second quarter of fiscal 2021 rose 45.6 percent to Rs 519.6 crore from Rs 356.78 crore in the year-ago quarter.

The consolidated total income of the company during the quarter increased to Rs 1,762.94 crore from Rs 1,492.60 crore, YoY.

The company said it had near-normal operations during the quarter.

“We have capitalized assets of Rs 615 crore during the quarter and the total capitalization done during the half-year amounted to Rs 830 crore. We expect to complete the ongoing capex programs by end of the financial year,” Divi's Laboratories said in a regulatory filing.

Apart from the existing capex programs, the company is taking up a new capex for an aggregate amount of Rs 400 crore for meeting new business opportunities in the custom synthesis projects, it added.

Global brokerage house Jefferies upgraded the stock to 'Buy' and raised the target price to Rs 3,772 per share from Rs 3,159 earlier. It also upgraded FY21/FY22 EPS estimates by 14 percent/14 percent.

Jefferies said that the company’s EBITDA beat was driven by sustained revenue and higher gross contribution.

Macquarie is of the view that the company’s new capex of Rs 400 crore and the resolution of Kakinada logjam will strengthen the growth outlook.

The brokerage said that Divi's Laboratories is well placed to accept opportunities from higher pharma outsourcing to India and the company is an attractive play on pharma outsourcing tailwinds for CRAMS and API segments.

Macquarie maintained an 'Outperform' rating on the stock with a target price of Rs 3,910 per share. It raised FY21-23 EPS estimates by 1-6 percent.

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