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Informist, Monday, May 11, 2026

 

By Eshitva Prakash

 

MUMBAI – Divi's Laboratories Ltd. is expected to report muted growth in its revenue and net profit for the March quarter despite the period being seasonally favourable for contract development and manufacturing organisations. The sales growth will be driven by the company's custom synthesis and nutraceuticals segment, brokerages tracking the company said. However, its expenditure is likely to have risen with supply lines getting stretched following the outbreak of war in West Asia.

 

Divi's Lab, among the world's top three manufacturers of active pharmaceutical ingredients, is expected to report a consolidated net profit of INR 6.98 billion for the March quarter, up 4.7% on year and up 3.9% from the previous quarter, according to an average of estimates from 11 brokerages. The company's consolidated revenue for the quarter is expected to rise nearly 12% on year and 10% on quarter to INR 28.32 billion, according to the average of estimates.

 

Analysts said the March quarter is usually a strong period for contract development and manufacturing organisations as pharmaceutical companies often ramp up outsourced activities towards the end of the financial year to use up budgetary allocations. In the March quarter a year ago, the company's top line had risen more than 20% on year.

 

JM Financial Institutional Securities Pvt. Ltd. has the highest estimate for the company's net profit at INR 7.90 billion while Equirus Securities Pvt. Ltd. has the lowest estimate at INR 5.66 billion. Estimates for revenue range from a high of INR 29.68 billion from Nuvama Wealth Management to a low of INR 26.07 billion from Equirus.

 

The seasonally strong March quarter, coupled with the rupee's depreciation, will help Divi's Lab achieve 14% year-on-year revenue growth, JM Financial said. "We anticipate margin expansion on account of improved business mix," the brokerage said.

 

"(The March quarter) has generally been the strongest quarter for Divi's, a trend we believe the company would sustain, supported by its custom synthesis business," Systematix Shares and Stocks (India) Ltd. said.

 

Equirus expects revenue growth to taper off owing to the lack of any new molecule supply in custom synthesis and a decline in the Sacubitril API sales. Kotak Securities, however, said the company's revenue from custom synthesis will grow 19% on year. The generic API segment accounts for nearly 49% of the company's total sales. Divi's Lab makes high-value custom synthesis products for the top 20 pharmaceutical companies, globally known as Big Pharma.

 

Brokerages said cautious spending by global innovator companies will hamper the company's volume growth and capacity utilisation. Additionally, rising freight expenses and logistical issues because of the war on Iran are likely to drive up costs, several brokerages said.

 

A few brokerages said generic API growth will be flat on year in the March quarter. Motilal Oswal Financial Services Ltd. expects a 4?cline. The company's nutraceuticals segment is expected to rise sharply, brokerages said. Several of them however, noted that this growth comes on a low base.

 

The company's earnings before interest, tax, depreciation, and amortisation are expected to be INR 9.73 billion, according to an average of estimates from 10 brokerages. The company's EBITDA margin is expected to decline sequentially due to the higher cost of goods sold, Nuvama Wealth Management Ltd. said.

 

Brokerages will wait to see how the company adjusts the prices of its API offerings given the impact of logistical costs in the near term. Some said they are waiting for commentary on additional capacity growth and capital expenditure in commissioning of additional lines in custom synthesis. Progress in the development of 10 new molecules will also be in focus, they said.

 

Of the 11 brokerage reports on the company available with Informist, six have a "buy" or equivalent recommendation on the stock with an average target price of INR 7,551. This is nearly 12% higher than the current market price. Three brokerages have a "hold" recommendation and two say "sell".

 

Monday, shares of Divi's Laboratories closed flat at INR 6,714 on the National Stock Exchange. The company reported its December quarter earnings on Feb. 11. Since then, the stock has risen 5%.

 

Following are the March quarter earnings estimates, in INR billion, for Divi's Laboratories from 11 brokerages in descending order of the net profit estimate:

 

Brokerage	Net Sales	Net Profit	EBITDA
JM Financial Institutional Securities Pvt. Ltd.	29.50	7.90	10.50
Systematix Shares and Stocks (India) Ltd.	28.95	7.80	10.74
Nuvama Wealth Management Ltd.	29.68	7.64	10.09
Elara Securities (India) Pvt. Ltd.	29.30	7.30	10.20
Prabhudas Lilladher Pvt. Ltd.	28.49	7.14	10.13
Kotak Securities Ltd.	28.69	6.82	9.69
ICICI Securities Ltd.	29.37	6.80	9.61
Batlivala & Karani Securities India Pvt. Ltd.	27.94	6.78	--
Motilal Oswal Financial Services Ltd.	26.78	6.51	9.05
SMIFS Ltd.	26.75	6.49	9.04
Equirus Securities Pvt. Ltd.	26.07	5.66	8.26
Average	28.32	6.98	9.73

 

End

 

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

 

Edited by Rajeev Pai

 

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