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Informist, Saturday, Aug. 1, 2026

 

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--Divi's Labs: Solvent costs remain elevated in Q1
--CONTEXT: Divi's Labs managment comments in post-earnings
--Divi's Labs: War in West Asia disrupted supply chain ops Q1
--Divi's Labs: Maintaining strategic inventory to mitigate supply shocks
--Divi's Labs: Freight costs elevated Q1, logistic svcs remain challenging
--Divi's Labs: Custom synthesis segment contributed 60% to Q1 revenue
--Divi's Labs: Cash on hand as on Jun 30 INR 36.11
--Divi's Labs: Have capability to offer entire chain of peptide-based pdts
--Divi's Labs: Q1 input costs high due to rise in solvent prices
--Divi's Labs: Maintaining stock to meet three months of supplies
--Divi's Labs: Kakinada unit playing key role in backward integration
--Divi's Labs: Expanding peptides manufacturing capacity to meet demand
--Divi's Labs: Looking for double-digit revenue growth FY27
--Divi's Labs: To sign two long-term clients for contrast media pdts soon

 

By Narayana Krishna and Arundathi A R

 

HYDERABAD/MUMBAI – Divi's Laboratories Ltd. plans to maintain three months' rolling inventory of raw materials as well as its products to mitigate supply disruptions and price volatility, the company management told analysts and investors in a post-earnings conference call Saturday.

 

"I think around March is the time when we decided we would hold the rolling three months (of inventory). And we would secure the material. And that's why we never had a production loss or a shipment stoppage in the last few months," the Divi's Lab management said.

 

For the June quarter, the company reported an inventory build-up of INR 5.7 billion, against INR 720 million a year ago. Given the uncertainty around supply of raw materials and challenges in shipping due to the war in West Asia, the company will continue to maintain the inventory until the situation returns to normal, the management said.

 

For the June quarter, Divi's Labs reported a rise of over 51% in its raw material costs to INR 14.95 billion, mainly on account of a step increase in solvent prices. Friday, its shares had ended at INR 8,056 on the National Stock Exchange, up 2.8% over Thursday.

 

The Divi's Lab management said global logistics conditions were challenging during the June quarter, resulting in higher air and ocean freight costs. Yet, for the quarter, the company reported a net profit of INR 8.9 billion, up nearly 60% on year and much higher than analysts' estimates. The company's revenue from operations also exceeded the Street's estimates with a jump of over 26% on year to INR 29.7 billion.

The management said it will stick to its stated guidance of double-digit revenue growth for the financial year 2026-27 (Apr-Mar) even though growth in the June quarter was higher than expectations. The company is in the process of signing long-term contracts with two customers in the contrast media segment. While 90% of the company's revenue comes from exports, Europe and North America account for 75% of its total revenues. The two major segments of the company's business are custom synthesis, which accounts for nearly 60% of business, and generic active pharmaceutical ingredients, which account for 40%. The Divi's Lab management said their plant at Kakinada in Andhra Pradesh is playing a significant role in backward integration of raw materials.

The management said peptides remain a strategic area of investment for the company. "Customer programmes continue to progress across multiple stages of development during the quarter, while qualification and validation activities for several peptide fragments are expected to advance over the coming quarter," it said. The company plans to expand its peptide fragment capacity to meet the demand. It said it has developed the capability to offer the entire cycle of products and processes in the peptides segment.  End

Edited by Rajeev Pai

 

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