Divi's Labs Q1 Review - In-Line, Backward Integration To Lead All The Way: Dolat Capital
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Dolat Capital Report
Divi’s Laboratories Ltd. reported an in-line Q1 despite a beat on margins due to higher tax spend.
Sales grew 13% YoY, 10% QoQ at Rs 196 billion.
Healthy gross margins at 67% (backward integration coupled with better process technology reduces dependency) and better product mix aided margins at 43.5% versus our expectation of 40.5%.
Adjusting for forex loss of Rs 190 million, profit after tax came in at Rs 5.4 billion exactly in line with our estimates.
Divi’s Labs highlighted six key growth engines that would continue to drive 10-15% revenue growth in the medium term with sustained margins.
Capex for the current growth drivers is already in the last stage and progressing well.
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