Why investors dumped Divi’s Labs shares despite a sharp rise in profit

pharma industry

by 5paisa Research Team Last Updated: Dec 12, 2022 - 02:31 pm 19.5k Views
Listen icon

Divi’s Laboratories, the second-most valued drugmaker in the country, saw its shares sink nearly 6% in mid-day trades after investors were not impressed by its financial performance for the three months ended June 30.

The company that trails only Sun Pharma among the most valued pharmaceutical stocks in India, had been trying to slowly pull back after crashing in three months ago in line with the rest of the market in May.

It had regained around 15% from the lows but lost momentum after the first quarter numbers.

Here’s how it fared

The company that is engaged in the manufacture of active pharmaceutical ingredients, intermediates and nutraceutical ingredients, saw its consolidated net profit shoot up 26% to Rs 702 crore while revenues rose 15% to Rs 2,255 crore in Q1 FY23 over Q1 FY22.

This was partly boosted by foreign exchange gain of Rs 56 crore, almost three times the level in the same quarter last year.

On a standalone basis, the company net profit rose 25.3% to Rs 691.61 crore on 15.52% increase in total revenue to Rs 2,293.91 crore in Q1 FY23.

While the net profit growth came ahead of what the street was expecting, the operating profit and margin picture was less attractive than what analysts were hoping to see.

Operating profit margin came at 37.6%. This was much below the year-ago level of over 43% and underperformed even the moderation baked in by analysts, who were expecting it to come at around 41% level.

While the company managed to reduce the raw material cost that partly neutralised the higher employee cost and depreciation provision, change in inventory and other expenses, that rose over 40% shrank the margins for the quarter.

How do you rate this blog?

Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage


About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Enjoy 0%* Brokerage with 5paisa
Resend OTP
Please Enter OTP
Mobile No. belongs to

By proceeding, you agree to the T&C.

Latest Blogs
Market Outlook for 22 April 2024

Our markets corrected sharply in the week gone by mainly due to uncertainty over global geopolitical tensions and selling by the FIIs which resulted in the index breaking the 22000 mark. However, we witnessed recovery from the low of 21780 in the last trading session and Nifty ended around 22150 with a weekly loss of over one and a half percent.

Stock in Action - Escorts Kubota Ltd

Escorts Kubota Stock Movement of Day    

Weekly Outlook on NATURAL GAS - 19 April 2024

The cost of natural gas saw a 2.7% increase yesterday, closing at 146.90, as projections of limited feed gas demand and milder weather tempered upward momentum. Despite concerns over a significant storage surplus and reduced demand forecasts for the next fortnight, substantial price shifts were notably absent.