Earnings Outlook
Divi's Labs Apr-Jun PAT seen up 37% on year
This story was originally published at 15:39 IST on 26 July 2024
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By Narayana Krishna
HYDERABAD – Traction in its custom synthesis and nutraceuticals sales and a low base are likely to help Divi's Laboratories Ltd report healthy earnings for the June quarter on a year-on-year basis, analysts said.
The high-value bulk drugs and specialty chemicals maker is likely to report 37% on-year growth in its standalone net profit for the quarter at 4.7 bln rupees, while its revenue is seen up 22% on year at 21.2 bln rupees, according to the average of the estimates of seven brokerages firms. On a sequential basis, however, Divi's Laboratories' net profit is seen down 11% and revenue down 6%.
Among the seven estimates, Nuvama Wealth had the lowest estimates for Divi's Labs, projecting a net profit of 3.9 bln rupees and revenue of 18.8 bln rupees. By contrast, Kotak Institutional Equities had the highest net profit forecast of 5.7 bln rupees and revenue estimate of 24.2 bln rupees.
Nuvama Wealth said Divi's Laboratories is expected to see 6% on-year growth in revenue, with better contribution from the custom synthesis business.
"On a low base across both generic active pharmaceutical ingredients and custom synthesis, we build in 36% year-on-year and 5% sequential sales growth for Apr-Jun," Kotak Institutional Equities said in a pre-earnings note.
Motilal Oswal said Divi's Laboratories is expected to deliver 23.7% year-on-year growth in sales for the quarter due to good traction in custom synthesis, supported by growth in the nutraceutical and generics business.
Divi's Laboratories is expected to report an improvement in its earnings before interest, tax, depreciation and amortisation or EBITDA margins for Apr-Jun on a year-on-year basis, while it may contract sequentially due to a high base, analysts said. Estimates for Divi's Laboratories' EBITDA margin for the June quarter were in the range of 28.7-32.1%. The average of six brokerages' estimates available for the company's EBITDA is 6.4 bln rupees.
Divi's Laboratories will announce its Apr-Jun earnings on Aug 3. Analysts will look for updates from the company on the status of the Kakinada project and its capital expenditure, the outlook on margins, and pricing trends in the bulk drugs business.
Following are the Apr-Jun earnings estimates for Divi's Laboratories Ltd based on reports compiled by Informist from seven brokerage houses:
Brokerage firm | Net sales | Net profit | EBITDA (in mln rupees) |
---(In mln rupees)--- | |||
Incred Research Services Pvt Ltd | 20,447.00 | 4,292.00 | 5,875.00 |
Kotak Institutional Equities | 24,170.00 | 5,715.00 | 7,764.00 |
KR Choksey Research | 20,981.00 | 4,792.00 | 6,528.00 |
Motilal Oswal Financial Services Ltd | 21,994.00 | 5,127.00 | 6,818.00 |
Nuvama Wealth Management Ltd | 18,847.00 | 3,930.00 | 5,588.00 |
Prabhudas Lilladher Pvt Ltd | 20,447.00 | 4,254.00 | 5,945.00 |
Sharekhan Ltd | 21,340.00 | 4,930.00 | --- |
Average | 21,175.14 | 4,720.00 | 6,419.67 |
At 1359 IST, shares of Divi's Laboratories were at 4,769.55 rupees on the National Stock Exchange, up 4.9% from the previous close. End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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