ADVERTISEMENT

Divi’s Labs Q2 Review - Rising Near Term Pressures: ICICI Securities

Divi’s Labs Q2 Review - Rising Near Term Pressures: ICICI Securities

<div class="paragraphs"><p>A worker wearing protective rubber gloves handles uncoated tablets. (Photographer: Andrey Rudakov/Bloomberg)</p></div>
A worker wearing protective rubber gloves handles uncoated tablets. (Photographer: Andrey Rudakov/Bloomberg)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Divi’s Laboratories Ltd.’s reported Q2 FY22 performance was below our estimates.

Consolidated revenue grew 13.6% YoY to Rs 19.9 billion (our estimate: Rs 20.9 billion), Ebitda margin dropped 120 basis points YoY to 41.2% (our estimate: 42.5%) and profit after tax grew 16.7% to Rs 6.1 billion (our estimate: Rs 6.3 billion).

The growth was driven primarily by custom synthesis business while generics declined YoY.

Strong positioning of Divi' s Labs will help in monetising the growth opportunity in active pharma ingredient and custom research and manufacturing services space given its stellar execution track record, recent capex of ~Rs 25 billion and being one of the preferred suppliers.

However, we envisage near term pressures growing with rising raw material prices, logistical issues and declining generics business.

Click on the attachment to read the full report:

ICICI Securities Divis Labs Q2FY22 Results Update.pdf

DISCLAIMER

This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.