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Informist, Monday, Jul. 27, 2026

By Narayana Krishna

HYDERABAD – Strong growth in the key custom synthesis segment is likely to support Divi's Laboratories Ltd.'s earnings for the June quarter, according to analysts. Contributions from the nutraceutical and contrast media segments are also expected to aid overall growth, though higher freight costs and raw material prices may limit margin expansion.

Divi's Laboratories is expected to report a consolidated net profit of INR 6.4 billion for the June quarter, up 15% on year but down 16% on quarter, according to the average of estimates from 12 brokerages. The highest estimate for net profit is INR 7.4 billion from Systematix Shares and Stocks (India) Ltd. and the lowest is INR 5.9 billion from Prabhudas Lilladher Pvt. Ltd.

The company's top line for the quarter is projected to increase 17% on year and decline 1% on quarter to INR 27.7 billion. The highest estimate for this is INR 29.8 billion from Elara Securities (India) Pvt. Ltd.  and the lowest is INR 26.8 billion from JM Financial Institutional Securities Pvt. Ltd.

Divi's Laboratories manufactures complex pharmaceutical products for global drug makers, including large multinational companies, and offers contract development and manufacturing services primarily to clients in the US and Europe.

GROWTH DRIVER

Growth in the custom synthesis segment is expected to remain the key driver during the quarter, supported by increased supplies to innovator companies and a healthy order pipeline. Analysts estimate growth in the segment in the range of 14% to 16% on year. ICICI Securities Ltd. expects strong traction in supplies to innovators to drive the segment, while Kotak Securities Ltd. also factors in steady growth led by continued demand from global clients. Custom synthesis accounts for nearly 55% of the company's total revenue.

The active pharmaceutical ingredients business is expected to see moderate growth, with an estimated rise of 9% to 11% on year, though pricing pressure and weak demand in some segments may weigh on performance. Nutraceuticals are expected to report steady growth, supported by a low base and improving demand.

Margins are expected to remain mixed, with estimates for earnings before interest, tax, depreciation, and amortisation margin in the range of about 30.0% to 32.6%, compared to 30.2% in the year-ago quarter. ICICI Securities and Motilal Oswal Financial Services Ltd. expect margin expansion supported by foreign exchange benefits and operating leverage, while HDFC Securities Ltd. and Nuvama Wealth Management Ltd. flag pressure from higher freight costs and increased input prices.

Growth in EBITDA is expected to broadly track revenue growth, supported by strong performance in the custom synthesis segment. However, higher logistics costs and raw material inflation are likely to limit margin expansion during the quarter, according to analysts.

Divi's Laboratories' June quarter EBITDA is pegged at INR 8.8 billion, according to an average of 12 estimates. The estimates range from INR 8.3 billion to INR 9.8 billion.

Divi's Laboratories will detail its June quarter earnings on Saturday. Analysts will watch out for the company's commentary on progress in commercialisation of glucagon-like peptide-1 related projects, pricing trends in the active pharmaceutical ingredients business, developments in iodine-based and gadolinium-based contrast media projects, and the company's capital expenditure plans.

The stock has risen a little over 5% since the announcement of its March quarter earnings. On Friday, the company's shares ended at INR 7,248.50 on the National Stock Exchange, down 0.8% from the previous close.

Of the 11 research reports on the company available with Informist, six have a "buy" or equivalent recommendation on the stock with an average target price of INR 7,642 per share, while two have a "hold" recommendation on the stock and three have a "sell" call.

Following are the Apr-Jun earnings estimates for Divi's Laboratories Ltd. from 12 brokerage firms in descending order by estimate of net profit, in INR billion:

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Edited by Shubhayan Bhattacharya

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