Divi’s Laboratories Shares Quarterly Results

Divi’s Laboratories

Corporate Action
by 5paisa Research Team Last Updated: 2022-08-08T18:46:27+05:30

For a long time, Divi’s has enjoyed high compounded sales growth and high operating profit margins in excess of 35%. This is all the more commendable considering that Divi’s operates in the active pharma ingredients (API) space, which is under a lot of pressure due to pricing. However, Q3 has been another stellar quarter for Divi with the bottom line nearly doubling over the previous year Dec-20 quarter.


Here is a gist of the Divi’s Labs Financial Numbers
 

Rs in Crore

Dec-21

Dec-20

YOY

Sep-21

QOQ

Total Income (Rs cr)

₹ 2,493.24

₹ 1,701.44

46.54%

₹ 1,987.51

25.45%

Operating Profit (Rs cr)

₹ 1,017.27

₹ 623.03

63.28%

₹ 740.72

37.34%

Net Profit (Rs cr)

₹ 902.24

₹ 470.62

91.71%

₹ 606.46

48.77%

Diluted EPS (Rs)

₹ 33.99

₹ 17.73

 

₹ 22.84

 

Operating Margins

40.80%

36.62%

 

37.27%

 

Net Margins

36.19%

27.66%

 

30.51%

 

 

For the Dec-21 quarter, Divi's Laboratories reported 46.5% increase in total sales revenues at Rs.2,493 crore on a YoY consolidated basis. During the December 2021 quarter, the Hyderabad based Divi’s Laboratories saw traction in all its key segments in its largely dominant global markets. Divi’s Laboratories specializes in the manufacture of active pharmaceutical ingredients (APIs), intermediates and nutraceutical ingredients. On a sequential basis, the revenues were up by 25.45%.

The global businesses of Divi’s Laboratories are executed via its global subsidiaries based out of the US and Europe. An interest point to note is t that, despite the pressure on generic API markets globally, the company did well. That is because, the specialized APIs business of Divi’s Laboratories continues to be immune to the pricing pressures that generic API companies are exposed to. More than 85% of its business flows come from export markets.

Let us now turn to the operating performance of Divi’s Laboratories. For the Dec-21 quarter, operating profits were higher by 63.28% at Rs.1,017 crore. Even sequentially, the operating profits were up by 37.34% and that shows a genuinely strong revival momentum in sync with the revival in pharma demand globally. The operating outperformance of Divi can be attributed to efficient cost controls at the company, apart from top line growth.

Input costs are in check. The cost of materials YoY was up by 32% and that gap with the growth in sales revenues ensured better price realization for the company. This also boosted the operating profit margins for Divi’s Laboratories. Operating margins for Divi’s Laboratories improved from 36.62% in Dec-20 quarter to 40.80% in Dec-21 quarter on cost and inventory efficiency. Operating margins were higher 453 basis points sequentially.

Finally, we turn to the bottom line of Divi’s Laboratories Ltd. Net Profits on a post-tax basis for the Dec-21 quarter was up by a healthy 91.71% at Rs.902.24 crore on YoY basis. This was on the back of a stellar operating performance in the quarter getting transmitted to the net profits of the company. The company already enjoys substantial financial comfort due to extremely low levels of debt resulting in limited commitments in the form of finance charges.

This results in solid margin performance for the quarter. For instance, PAT margins improved sharply from 27.66% in Dec-20 quarter to 36.19% in the Dec-21 quarter. The PAT margins were also, incidentally, higher on a sequential basis by about 568 basis points.


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