- 24 May 2022
- ICICIdirect Research
Divi’s Lab reports significant beat driven by custom synthesis, generics under pressure
DIVISLAB - 5094 Change: 81.35 (1.62 %)News: Revenues grew 41% YoY to Rs. 2518 crore (I-direct estimate: Rs. 2302 crore). EBITDA margins improved 380 bps YoY to 43.9% (I-direct estimates of 42.4%) mainly due to lower employee and other expenditure offsetting minor dip in gross margins (down 79 bps YoY to 66.7%). Subsequently, EBITDA grew 54% YoY to Rs. 1104 crore (I-direct estimate: Rs. 976 crore). Net profit grew 78% YoY to Rs. 895 crore (I-direct estimate: Rs. 795 crore). Delta vis-à-vis EBITDA mainly due to lower interest and tax expense
Views: Divi’s Laboratories' quarterly performance was a significant beat vis-à-vis I-direct and consensus estimates amid near normal operations in Q4FY22. FY22 revenue mix was, Generics – 41% and Custom Synthesis – 59 while exports accounted for 90% of revenues. More than strong quarterly performance, the important narrative for Divi’s is its unprecedented capex plans to further augment capacities besides preparing for growing opportunities arising due to China plus one factor. It has earmarked an aggressive capex of ~Rs. 2000 crore (including greenfield Kakinada plant) over next two years in order to take a chunk of ~US$20 billion opportunity of APIs going off-patent over FY23-25. Divi’s remains a quintessential play on the Indian API/CRAMs segment with its product offerings and execution prowess
Impact: Positive