Divi’s Labs Q4 Results: Net Profit Rises 7%, Beats Estimates
Gel capsules are seen at a factory. (Photographer: Antoine Antoniol/Bloomberg)

Divi’s Labs Q4 Results: Net Profit Rises 7%, Beats Estimates

Divi’s Laboratories Ltd.’s quarterly profit rose by nearly 7% sequentially, beating analyst forecasts.

India’s second-largest drugmaker by market value reported a net profit of Rs 502.02 crore in the three months through March, according to its exchange filing. Analysts’ estimates compiled by Bloomberg pegged a profit of Rs 469.94 crore.

Revenue rose 5% quarter-on-quarter to Rs 1,788.19 crore—the consensus estimate was Rs 1,700.48 crore.

Highlights (QoQ)

  • Operating profit rose 4% to Rs 716.26 crore against the analysts’ forecast of Rs 674.97 crore.
  • Margin remained largely unchanged at 40.06% vs 40.6%.

The company has proposed a final dividend of Rs 20 per share for the financial year 2020-21.

Shares of Divis Laboratories ended 1.12% higher at Rs 4,125 apiece ahead of the earnings announcement on May 28 compared with the benchmark NSE Nifty 50’s 0.64% rise.

Highlights from call with analysts

  • Exports for the quarter made up 90% of the sales and 88% for the full fiscal.

  • Nutraceutical business contributed around Rs 156 crore for the quarter ended March and Rs 594.5 crore for the full fiscal.

  • The company is operating at around 86% production capacity despite the pandemic's disruptions.

  • Second wave of Covid-19 has amplified logistical challenges and the company expects these challenges to continue.

  • Confident of being able to mitigate procurement issues on account of significant investments made over past two years towards backward integration and by geographically diversifying supplier base. Thus, no supply threats from China for raw materials.

  • Backward integration and constant introduction of latest technology have been key drivers for margin expansion and will continue to do so in the future.

  • Automation and green chemistry have helped minimise yield variations and maximise yields with efficiency.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.