Divi’s Labs Q2 Results: Profit Falls, Misses Estimates
Divi's Laboratories Ltd.'s second-quarter profit fell, missing estimates.
Net profit of India's second-largest drugmaker by market value fell 19% year-on-year to Rs 494 crore in the three months through September, according to its exchange filing. That compares with the Rs 618-crore consensus estimate of analysts tracked by Bloomberg.
Sequentially, profit fell 30%.
Divi's Laboratories' Key Highlights (YoY)
Revenue fell 7% to Rs 1,855 crore compared to an estimate of Rs 2,230 crore.
Operating profit declined 24% to Rs 621 crore, against an estimate of Rs 854 crore.
Operating margins are at 33.5% versus 41.2%, and against a forecast of 38.3%.
Other Highlights
Its overall exports for the year stood at around 87%, of which 68% was to the regulated markets of U.S. and Europe.
The company has faced an increase in logistics costs this quarter over last year while its energy costs have gone up by four times.
It has seen sea/air freight cost declining in recent months and the raw material supply issues have slightly stabilised.
The company's custom synthesis and generic revenue split is 57%:43%.
Revenues were down 13% on a constant currency basis.
Overall capacity utilisation is at 80-83%.
The company's backward integration projects have helped the company reduce the dependence from China by ~20% year-on-year in H1 FY23.
Divi's has received multiple opportunities in its CDMO business in the last six months with molecules that are in Phase 2 and 3 trials.
The company expects good results from this business, which will take four to six quarters to materialise.
The company expects to see improvement in the API generics business, especially for cough and cold medicines which has a seasonal benefit.
Divi's expects the API generic opportunity to be ~$ 20-25 billion (Rs 1.6-2 lakh crore) over the FY23-25 period.
Divi's has worked extensively on backward integration of its Sartan portfolio.
There is no progress on clearance in the Kakinada project.
Shares of Divi's Labs closed 8.63% lower on Monday, after the quarterly results and earning call, compared with a 0.39% rise in the benchmark Sensex.
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