Friday, September 18, 2009

DIVIS LABS LOW BOOK VALUE


Can u plz help me in knowing what is the future of Divis Laboratories Ltd.I have bought it at 534/sh? Regards, ask by Swati Seth ji
1. Divis lab is a 2 rupees face value share with a book value of 67 only so current prices is much higher compare to book value.
2. Divis lab P/E is 16 is also high in pharma sectors.
3. On Friday only 17.22 percent buying is delivery base very poor delivery interests.
4. Divis Laboratories Ltd has informed BSE that Compensation Committee of Board of Directors in its meeting held on August 17, 2009 made the allotment 861045 equity shares of Rs 2/- each to the employees under ESOP 2006 Scheme of the Company. So this is the equity dilution reduce EPS of company.
5. Bonus also dilutes equity so price reduction from year high in this share is due to bonus adjustment.
6. Divis lab is an average pharma company but AVOID buying it because recent bonus declaration or equity dilution, low face value, poor book value with high P/E.
7. But in your case no need to worry mutual funds hold 14.63 percent in this stock and due to fund activity you may get a chance of exit from this stock.

THIS ANALYSIS IS MAHESH CHANDER KAUSHIK OPINION ONLY NOT A PROFESSIONAL ADVICE SO READ DISCLAIMER BEFORE TAKE ANY ACTION.
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