Earnings Review: Divi's Labs Jan-Mar PAT 5.3 bln rupees, up 67% YoY
Informist, Saturday, May 25, 2024
--Divi's Labs: Expect double-digit revenue growth in FY25
--Divi's Labs: FY25 capex seen around 15 bln rupees
--Divi's Labs: Expect Kakinada plant to begin ops in phases FY25
--CONTEXT: Comments by Divi's Labs management in post-earnings call
--Divi's Labs: Raw material costs stabilised in Jan-Mar
--Divi's Lab: Board reappoints Murali Divi as MD for 5 years
--Divi's Lab FY24 revenue 76.65 bln rupees vs 76.25 bln
--Divi's Lab FY24 net profit 15.76 bln rupees vs 18.08 bln
--Divi's Lab Jan-Mar revenue 22.59 bln rupees vs 19.08 bln
--Divi's Lab Jan-Mar net profit 5.31 bln rupees vs 3.19 bln
--Divi's Lab to pay 30 rupees/share final dividend
--Analysts saw Divi's Lab Jan-Mar net profit 4.68 bln rupees
By Narayana Krishna
HYDERABAD - A better than expected recovery in the generic active pharmaceutical ingredients and custom synthesis business led Divi's Laboratories Ltd to report a 66.5% on-year surge in its net profit for Jan-Mar at 5.3 bln rupees. The company's revenue was 22.6 bln rupees, up 18.4% on year.
The average of the estimates of seven brokerage firms had pegged a 47% on-year rise in the company's net profit at 4.7 bln rupees, while the net sales were seen up 11% at 21.1 bln rupees.
Sequentially, the company's net profit rose 48.3% and the revenue was up 25%.
Divi's Laboratories makes high-value speciality chemicals and bulk drugs. Recently, it launched contrast media products, which are used in scanning or imaging the human body, mainly for diagnosis purposes.
While generic active pharmaceutical ingredients accounted for 49% of the total sales, the custom synthesis segment contributed 51%, the company's management said in a post-earnings conference call.
Divi's Labs' earnings before interest, tax, depreciation and amortisation, or EBITDA, margin for Jan-Mar expanded by 611 basis points to 31.74%. The higher share of custom synthesis in overall revenues aided margin growth during the quarter, the management said.
Analysts had expected the company's EBITDA margin at 25.9-30.0%. Divi's Labs was earlier known for above 34% margin delivery, and analysts were keenly awaiting when the company would return to those levels. Along with custom synthesis, a better product mix also aided the margin recovery, the management said. However, pricing pressure was seen in the case of some products, and this may have an impact on the overall performance going forward, the company said.
The company's total expenses during the quarter rose 8.8% on year to 16.4 bln rupees. Raw material costs were up 14.8% on year at 9.1 bln rupees. Raw material prices were now stabilising, helping the company manage costs, the management said.
FY25 CAPEX
Divi's Labs expects its capital expenditure in 2024-25 (Apr-Mar) to be around 15 bln rupees, which includes pending capex on the Kakinada plant and 7 bln rupees of capex announced recently for new capacity addition for a client.
The company's management said the greenfield project at Kakinada was expected to begin production in the current fiscal year in phases, while the 7-bln-rupee expansion plan for a client is to be completed in 2026-27.
For 2023-24, the company's net profit declined 12.8% year-on-year to 15.8 bln rupees, while revenue was up marginally by 0.5% at 76.7 bln rupees. The management said its expects double-digit revenue growth for the current financial year.
The company's board today recommended final dividend of 30 rupees per share. It also approved the appointment of Murali Divi as managing director for another five years.
On Friday, shares of Divi's Laboratories ended at 4,122.40 rupees on the National Stock Exchange, up 0.2% over Thursday. End
