Analyst Concall
Divi's Lab to exceed FY26 capex aim on capacity expansion
This story was originally published at 17:30 IST on 7 November 2025
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--Divi's Lab: Engaged with global innovators for custom synthesis ops
--CONTEXT: Divi's Lab mgmt's comments in post-earnings call with analysts
--Divi's Lab: In talks with Big Pharma cos to manufacture peptide products
--Divi's Lab: Three capex programmes initiated to expand capacities
--Divi's Lab: Raw material prices remained stable in Jul-Sept
--Divi's Lab: Kakinada plant supporting with key starting materials supply
--Divi's Lab: Custom synthesis contributed 56% to Q2 sales, generic API 44%
--Divi's Lab: US, Europe together accounted for 73% of total exports in Q2
--Divi's Lab: Facing pricing pressure in generic business
--Divi's Lab: Expect generic pricing environment to improve in coming qtrs
--Divi's Lab: Capex for FY26 seen higher than guidance of INR 20 bln
--Divi's Lab: May exceed FY26 capex aim due to additional capacity expansion
--Divi's Lab: See no change in generic pricing environment next 2 quarters
By Taniva Singha Roy and Narayana Krishna
MUMBAI/HYDERABAD– Divi's Laboratories Ltd. is likely to exceed its capital expenditure target for the current financial year ending March due to additional expansion of capacity. The capex is likely to be higher than the earlier guidance of INR 20 billion, the company's management said at a post-earnings call with analysts.
Divi's Lab has increased its capex plans for the second time this fiscal year. Divi's Lab had initially planned a capex of around INR 14 billion for FY26, which was later increased to INR 20 billion.
The company has initiated three capex programmes to expand capacity. It has engaged with global innovators for custom synthesis operations and is in talks with Big Pharma companies to manufacture peptide products, the company's top management said.
Divi's Labs is a supplier of high-value, difficult-to-make pharmaceutical products to global pharmaceutical manufacturers, including the top 20 companies known as Big Pharma. The company also offers contract manufacturing services to pharmaceutical companies in the US and Europe, as well as manufacturing active pharmaceutical ingredients.
The Hyderabad-based company is currently facing pricing pressure in the generic business. Though the company is expecting some improvement going forward, it is not seeing any change in the next two quarters.
Divi's Lab reported robust growth in the bottom line and top line in the September quarter. The growth was despite stress in the US market, driven by policy uncertainties, pricing pressure, and market-share erosion. Its net profit for the quarter rose over 34% on year and nearly 25% on quarter to INR 6.96 billion. This was higher than the Street's expectation of INR 6.03 billion. The pharmaceutical company's revenue from operations rose around 16% on year and 13% on quarter to INR 26.60 billion. The revenue for the quarter exceeded the analysts' estimate of INR 26.29 billion.
The company's raw material prices remained stable in the Jul-Sept quarter, supported by reliable supply from a diversified base. "We continue to monitor macroeconomic factors, including the effect of US tariffs on suppliers from China and sanctions related to Russia, which may influence costs for certain raw materials, intermediates, and solvents," the management said.
As a precautionary step, the company has maintained appropriate inventory levels, expanded sourcing options across regions and progressed vendor qualifications where necessary. On the background integration front, the company's Kaikinda plant has supported by providing key starting materials for all of the product categories, the company said. "Our backward integration program, particularly through the Unit 3 facility in Kakinada, has supported supply security and cost management," the management said.
Material consumption for the quarter accounted for about 39.5% of sales revenue, consistent with the company's recent trend. Export accounted for 90% of the total sales revenue during the September quarter, the company said. The US and Europe together accounted for 73% of total exports in the September quarter, it said.
Custom synthesis contributed 56% to the September quarter sales and generic API contributed 44% to the sales. "We have a forex gain of INR 102 crores (INR 1.02 billion) for the current half year," the company's management said. On a constant-currency basis, revenue growth for the half year has been 12.3%.
Friday, shares of Divi's Laboratories closed 3.3% lower at INR 6,656.50 on the National Stock Exchange. End
Edited by Saji George Titus
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