Earnings Review
Divi's Labs PAT up 66% on year at INR 5.94 bln, beats view
This story was originally published at 14:12 IST on 3 February 2025
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By Narayana Krishna
HYDERABAD - Speciality chemicals and high-value bulk drugs manufacturer Divi's Laboratories Ltd. Monday reported a net profit of INR 5.94 billion for the December quarter, up 66% on year. The growth in net profit is higher than in the last two quarters and much higher than analysts' estimate of INR 4.98 billion.
The company's revenue for the quarter rose over 27% on year to INR 22.97 billion, led by robust growth across all business segments. Sequentially, the net profit was up nearly 15%, while the revenue fell 0.22%.
The robust growth in the company's profit was despite a steep increase of 32% in its raw material costs during the quarter.
The company has announced the reappointment of Kiran S. Divi as chief executive officer for five years, effective Apr. 1.
Following the announcement of the company's December quarter earnings, its shares recovered and were up over 4% at INR 5851.15 on the National Stock Exchange.
Analysts had expected Divi's Labs to report a decent performance for the December quarter, led by growth in its custom synthesis business, which is a high-margin segment.
From the September quarter of 2022, Divi's Labs reported a drop in its net profit due to the absence of COVID-19 related products, cancellation of some projects, and various operational issues. However, the company saw a recovery in its profit growth from the March quarter of 2023 and started improving its margins and profitability amid traction in the custom synthesis and nutraceuticals segments, and the addition of new business such as contrast media. The custom synthesis segment accounts for nearly 51% of the company's total revenue.
For Apr-Dec, Divi's Labs reported a net profit of INR 15.42 billion, up 47.6% on year, while its revenues rose 23% on year to INR 66.62 billion.
For the December quarter, the company's total expenses rose nearly 17% on year to INR 16.5 billion rupees. Employee benefit costs were up 10% on year at INR 2.9 billion.
Divi's Labs said the first phase of its greenfield facility at Kakinada was operational from Jan 6, and the remaining part of the facility would be fully operational in the next six months.
The company is scheduled to hold an analyst conference call on its December quarter earnings later on Monday. End
US$1 = INR 87.10
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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