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Informist, Saturday, May 17, 2025

 

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--Divi's Labs expects revenue to grow in double digit in FY26
--Divi's Labs: Generics business facing competition, pricing pressure
--Divi's Labs: Cash on hand INR 36.96 billion as of Mar. 31
--Divi's Labs: Logistic disruptions at Red Sea impacting delivery timelines
--Divi's Labs: Peptide business gained traction on back of global demand
--CONTEXT: Divi's Labs management comments in post-earnings analyst call
--Divi's Labs: Raw material prices stabilised in Jan-Mar

 

By Narayana Krishna and Gopika Balasubramanium

 

HYDERABAD/MUMBAI – Divi's Laboratories Ltd. is confident of maintaining a double-digit revenue growth in 2025-26 (Apr-Mar) led by custom synthesis and growing global demand for products in peptides segments, the company management said in a post-earnings analyst call.

 

"...we would always look at double-digit growth. And we would always assume, and our work would always be towards making sure the organisation grows at a consistent pace of double-digit growth," Divi's Labs management said.

 

The company is also working on expanding the capacities in contrast media segment as demand for these products is increasing. Divi's Labs on Saturday reported a net profit of INR 6.7 billion for the March quarter, up 25.6% on year and 12.3% on quarter, beating analysts' estimates of INR 6.1 billion. The company's revenue rose 12.3% on year and 10.4% on quarter to INR 25.4 billion, marginally lower than the estimate of INR 25.5 billion.

 

Divi's Laboratories said the costs of raw material for the quarter ended March has stabilised. "This quarter, we witnessed relative stability in raw material pricing, which is an encouraging sign, given the fluctuations seen in the previous quarter."

 

Divi's Labs management said logistic disruptions at Red Sea are still impacting the shipments to several regions, the company said. "Red Sea disruptions have not only affected inbound shipments, but have also significantly influenced our global delivery timelines.

 

Vessel diversions and increased congestion at trans-shipment ports have resulted in extended shipping times and elevated freight costs, especially to key markets such as European Union, the US, and Latin America," Divi's Labs management said. The company is working to minimise the impact and reduce the delivery timelines. 

 

Divi's Labs management said the generic active pharmaceutical ingredients business is facing high competition and pricing pressure now. The generics segment accounts for 49% of the company's total sales. Despite challenges, Divi's Labs is maintaining stable volumes. The management said its custom synthesis business segment is growing strong, and the trend will continue, aided by new projects. Custom synthesis accounts for nearly 51% of the total sales.

 

As of Mar. 31, the company had cash reserves of INR 36.96 billion, receivables at INR 28.55 billion and inventory INR 30.33 billion. Divi's Labs said it was trying to maintain a lean inventory but it all depended on the product volumes and nature of the molecule.

 

On the Kakinada plant, the company has so far spent INR 14.97 billion on phase-I and expects to spend another INR 2 billion in the next few months. The company is yet to take a call on phase-II of the project. The company said ramping-up production at Kakinada will help the revenue as well as margins grow going forward.

 

On Friday, Divi's Labs shares ended at INR 6,279.50 on the National Stock Exchange, up 1.1% from their previous close.  End

 

Edited by Akul Nishant Akhoury

 

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