Divi’s Laboratories Q3: After Operationally Strong Results, Management Says Things Set To Improve
General views of drugs (Photographer: Brent Lewin/Bloomberg)

Divi’s Laboratories Q3: After Operationally Strong Results, Management Says Things Set To Improve

Divi's Laboratories Ltd. reported their December quarter results that were mostly in-line with analyst expectations.

Revenue for India's second-largest pharma company by market capitalisation rose 22% from last year to Rs 1,701.4 crore. That compares to the consensus estimates of analysts, which had pegged the figure at Rs 1,694 crore.

Net profit for the period rose 31% year-on-year to Rs 470.6 crore, marginally higher than the analyst projection of Rs 458.7 crore.

Operating profit or earnings before interest, tax, depreciation and amortisation for the Hyderabad-based company rose 45% from the previous year to Rs 688.7 crore, which was higher than the Bloomberg consensus estimate of Rs 650.8 crore. Margins expanded 640 basis points to 40.5% from 34.1% last year.

In December last year, Divi's Laboratories became only the second listed pharma company in India after Sun Pharma to cross the Rs 1 lakh crore market capitalisation mark. Shares were the best performers on the Nifty 50 index, not only doubling in value terms but also adding over Rs 50,000 crore to its market capitalisation in the year.

Concall Takeaways

The company in its conference call on Saturday said that it is confident of sales improving in the future. It also said that it is venturing into contract media API in a big way for high volume products.

Here are some of the other highlights from the analyst call:

  • Confident of maintaining margins going forward. Planning, design, research and execution contributed to improvement in margins.
  • Customs Synthesis business has higher margins as compared to generics. However, this quarter had higher share of generics (60:40). Despite this, there was improvement in margins.
  • Not losing any business because of the delays in Kakinada.
  • “This is just the beginning of growth and I think Q4FY21 and Q1FY22 onwards, you should see the growth curve,” Murali Divi, Managing Director was quoted as saying.
  • More confident of maintaining margins going forward as compared to sales
  • Do not foresee any issues for the generics business at least for the next four years.
  • Not only free from supply threats from China, but also achieving cost savings.
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