Divi's Lab Q3 Results: Profit Rises But Misses Estimates, Revenue Up 9%

Divi's Laboratories Ltd.'s third quarter profit rose, but missed analysts' estimates.

The company's profit was up 17% year-on-year at Rs 358 crore in the quarter ended December, according to an exchange filing on Saturday. That compares with the Rs 418-crore consensus estimate of analysts tracked by Bloomberg. Sequentially, profit rose 3%.

• Revenue rose 9% to Rs 1,855 crore (Estimate: Rs 1,997 crore)

• Operating profit increased 20% to Rs 489 crore (Estimate: Rs 571 crore)

• Operating margin was at 26.36% versus 23.94% (Estimate: 28.6%)

• The custom synthesis to generic split is 46:54.

• The exports for the quarter were at 87% of revenue of which 71% was to the US and Europe combined.

• Their nutraceuticals business was at Rs 153 crore for the quarter.

• The management said that it was a steady quarter with favourable product mix and declining raw material costs aided gross margins.

• Red Sea crisis is leading to an increase in freight and insurance costs and causing delays in shipments.

• Q3 is usually a weaker quarter for the company.

• Every four-five years competitors start destocking hence there was pricing pressure. Company expects stability in the next two to three quarters.

• The capacity utilisation was at 80%.

• The company said that they will take two to two and half years to reach optimum capacity utilization.

• Excluding covid, they have acheived double-digit growth in the nine months ended December.

• The company is now focusing more on developing new products, new molecules.

• There is Rs 3,913 crore of cash on books as on Dec 31.

• The company has two major custom synthesis projects in big pharma and expects contribution to increase.

• Divis is under process of getting their peptide products qualified and these will start contributing from 2025 onwards.

Shares of Divi's Laboratories closed 0.9% higher at Rs 3,651 apiece on the BSE on Friday, as compared with a 0.23% rise in the benchmark Sensex.