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Informist, Tuesday, Feb. 10, 2026

By Narayana Krishna

HYDERABAD – Divi's Laboratories Ltd. is projected to report moderate year-on-year growth in its net profit for the December quarter due to price erosion in some categories of products. The company's sales are expected to see healthy growth for the quarter, analysts said.

The specialty chemicals and high-value bulk drug manufacturer is expected to report nearly a 7% year-on-year increase in its net profit for the December quarter to nearly INR 6.4 billion. The company's revenue is expected to rise a little over 15% on year to INR 26.5 billion, according to the average of estimates from 11 brokerages.

Compared to the trailing quarter, the net profit is likely to see a fall of a little over 9%, and the revenue is expected to be almost flat. Weak sequential performance is mainly on account of seasonal weakness coupled with a fall in some product prices.

Mirae Asset Sharekhan Ltd. has the highest estimate for Divi's Labs' December-quarter performance, pegging net profit at nearly INR 7 billion and revenue at a little over INR 28 billion. At the lower end, Systematix Shares and Stocks (India) Ltd. estimates net profit at about INR 6 billion and revenue at just above INR 23 billion. Divi's Labs will announce its December-quarter earnings on Wednesday.

Most brokerages expect Divi's Labs to deliver revenue growth of about 12–16% on year in the December quarter, driven primarily by strength in the custom synthesis business. Divi's Labs makes high-value custom synthesis products for top-20 pharmaceutical companies, globally known as Big Pharma. 

ICICI Securities expects revenue growth of 15.4% on-year, led by custom synthesis traction, while Motilal Oswal and Nuvama Wealth project 15.5% and 15.6% on-year growth, respectively, supported by growth across segments.

Kotak Securities is relatively conservative, factoring in 12% on-year growth, while HDFC Securities pegs revenue growth at 15% on-year. Compared to the trailing quarter, most brokerages expect flat to slightly negative growth, with estimates ranging from a flat earnings expectation by JM Financial Institutional Securities Pvt. Ltd. to a 2–4% quarter-on-quarter decline by HDFC Securities Ltd. and Kotak Securities Ltd., largely due to seasonality and moderation in supplies.

Analysts remain positive on Divi's Labs custom synthesis business, which continues to be the key growth driver despite some seasonal softness on a sequential basis. The custom synthesis business accounts for nearly 50% of the company's total revenue.

Motilal Oswal projected 20% year-on-year growth in this segment, citing additions of newer molecules and sustained client traction. Expectations for the generic active pharmaceuticals segment are relatively muted compared with custom synthesis, reflecting a challenging pricing environment. HDFC Securities expects generic APIs to moderately grow at 9% year-on-year, citing continued pricing pressure. Kotak Securities is more cautious, forecasting 5% year-on-year and 1% quarter-on-quarter growth in generic API sales for the December quarter. The generic API segment accounts for nearly 49% of the total sales.

Divi's Labs' earnings before interest, tax, depreciation, and amortisation margin estimates for the December quarter are in the 31–33% range against 32% EBITDA reported a year ago. Most brokerages point to a stable margin profile despite segmental volatility for the quarter. JM Financial and Prabhudas Lilladher expect EBITDA margins at around 33%, aided by a favorable business mix and a sustained contribution from the high-margin custom synthesis segment. HDFC Securities pegs EBITDA margin at 32.6%, slightly higher on-year and on-quarter, supported by product mix improvement despite seasonal weakness.

The average of estimates from 11 brokerages pegs Divi's Labs' December-quarter EBITDA at INR 8.6 billion. Market participants are looking for the company's commentary on the status of production ramp-up at the Kakinada plant and capital expenditure plans for glucagon-like peptide-1 category capacity additions.

At 1135 IST, the company's shares were trading at INR 6,189.50 on the National Stock Exchange, up nearly 1.2%.

Of the eight research reports on the company available with Informist, four have a 'buy' or equivalent rating on the stock with an average target price of INR 7,456. This is 20% higher than the current market price. One brokerage has a 'hold' rating on the stock with a target price of INR 6,925 and three brokerages assigned a 'sell' rating with an average price target of INR 5,295. 

The stock has fallen nearly 8% since the announcement of its September quarter earnings.

Following are the Oct-Dec earnings estimates for Divi's Laboratories Ltd. from 11 brokerage firms in the descending order by the estimate of net profit in INR billion:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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