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Informist, Monday, Aug. 4, 2025

By Devanshi Verma

MUMBAI – Divi's Laboratories Ltd. is expected to report a robust on-year growth in both its net profit and revenue for the June quarter, according to brokerages tracking the company. The company's top line is expected to be driven by an increase in volumes in its two major segments, new launches in the contrast media segment, and higher capacity utilisation.

The company is expected to report a net profit of INR 6 billion for the June quarter, up 40% on year but down 10% sequentially, according to the average of estimates from six brokerages. The highest estimate for the company's net profit is INR 6.29 billion by Systematix Shares and Stocks (India) Ltd. while the lowest net profit estimate of INR 5.38 billion is from Prabhudas Lilladher Pvt. Ltd.  

The company's net sales are expected to rise to INR 24.79 billion, up 20% from INR 20.63 billion a year ago. The highest estimate of INR 25.46 billion for sales is from Dolat Capital Market Pvt. Ltd. while the lowest estimate of INR 23.87 billion is from Prabhudas Lilladher. The pharmaceutical company's revenue for the trailing quarter was INR 25.36 billion.

Divi's Laboratories specialises in manufacturing generic active pharmaceutical ingredients, custom synthesis, and nutraceuticals. Generic active pharmaceutical ingredient is the core ingredient of a medicine used to treat an illness. Custom synthesis refers to customised manufacturing of a chemical compound as per the client company's requirements. Nutraceuticals are health support supplements made from food-based ingredients.

The company's product portfolio comprises two broad categories – generic active pharmaceutical ingredients and nutraceuticals, and custom synthesis of active pharmaceutical ingredients and specialty ingredients. In 2024-25 (Apr-Mar), generics accounted for 46% and custom synthesis accounted for 54% of the product mix.

Divi's Labs is expected to report strong on-year sales in the latest quarter led by robust growth across generic active pharmaceutical ingredients and custom synthesis segment, analysts said. The pharma company is expected to deliver a 19% on-year growth in sales on account of broad-based growth across segments, Motilal Oswal Financial Services said.

The pharma giant is expected to deliver a 25% on-year growth in custom synthesis sales for the quarter, according to Motilal Oswal. "We expect continued traction in CSM (custom synthesis manufacturing) with 23% yoy growth (-3% qoq) in 1QFY26 (Apr-Mar)," said Kotak Institutional Equities.

The company's generic active pharmaceutical ingredients business is expected to see a 13% on-year growth, but a 4% fall sequentially. The company is expected to post a 15% on-year growth in the nutraceuticals segment, Kotak said.

Divi's manufactures chemical intermediates used in contrast media portfolio and Glucagon like-Peptide-1. Contrast media refers to substances used in medical procedures to enhance the visibility of internal organs. Glucagon like Peptide-1 category drugs are used to treat diabetics and obesity.

The timeline for the commercial supply of Glucagon like Peptide-1 (GLP-1) in the contract research and manufacturing services business, and new launches in its contrast media portfolio are the key metrics to monitor from the company's management, according to Systematix.

Analysts expect Divi's to report a robust margin expansion for the quarter. The company is expected to report a year-on-year margin expansion exceeding 400 basis points, according to Nuvama Wealth Management Ltd. A better product mix and lower operating expenses will drive the on-year margin growth, said Prabhudas Lilladher. The company is expected to deliver a strong margin growth, led by commercialisation of custom synthesis contracts, said Deven Choksey Research.

The pharma company's on-year earnings before interest, tax, depreciation, and amortisation margin is expected to expand by 370 bps to 33% in Apr-Jun, according to Kotak. The EBITDA margin growth is led by expansion in gross margins, supported by backward integration, improved product mix, and operational efficiencies, said Deven Choksey. Brokerages' estimates for EBITDA margin range between 31% and 34%.  

Divi's Labs commenced commercial operations from a part of the first phase of the third unit of its greenfield project at Kakinada, Andhra Pradesh, in January. This ramp-up is also likely to enhance cost efficiencies and mitigate raw material price volatility, said Deven Choksey.

The company is scheduled to announce its June quarter earnings Wednesday. Analysts are closely watching the progress of production ramp-up at Kakinada and new contrast media launches.

On Monday, the company's shares closed at INR 6,489.50 on the National Stock Exchange, up 2%. The shares have been down 1.4% since the company announced its March quarter earnings.

Of the 13 brokerage reports available on the stock with Informist, seven have a 'buy' recommendation on the stock with an average target price of INR 6,491 and four have a 'sell' recommendation with an average target price of INR 4,802. Two brokerages have a 'hold' recommendation.

Following are the Apr-Jun earnings estimates for Divis Laboratories Ltd., based on reports from six brokerages in the descending order of the net profit:

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Edited by Tanima Banerjee

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