Divi’s Labs Q3 preview: PAT may grow 33% YoY on favourable base; outlook eyed

Divi’s Laboratories Ltd is expected to report a strong double-digit year-on-year (YoY) growth in earnings for the quarter ended December, aided by a favourable base and stable raw material costs.

The consolidated net profit for the quarter is seen rising 33% YoY to Rs 407.40 crore, according to the average of estimates given by five brokerage firms.

Revenue is likely to grow by 17% YoY to Rs 1,994.20 crore, and operating profit, calculated as earnings before interest, taxes, depreciation and amortization or EBITDA, is seen increasing by 38% to Rs 562 crore, the estimates showed.


The Hyderabad-based drugmaker is slated to release its quarterly earnings on Saturday.

Here’s summarising what analysts expect from the drugmaker and its management:

Motilal Oswal Securities
On a low base of last year, Divi’s is expected to deliver 19% YoY growth in sales for the quarter. Update on pricing of generic API portfolio, impact on freight costs due to the recent global political turmoil, and updates on the pipeline of iodine and sartan-based products will be the key monitorables.

Kotak Institutional Equities

We built in 22% YoY and 9% QoQ sales growth for Divi's, led by 18% and 35% growth in generics and nutraceuticals, respectively.

We note CSM sales in Q3 would be benefited by sales from the fast-track contrast media project and hence, forecast 10% QoQ CSM sales growth.

Compared with $5 million sales in Q3 FY23, we estimate nil Molnupiravir sales by Divi's in Q3 FY24.

On an ex-Molnupiravir basis, we build in 25% YoY and 31% YoY growth for overall sales and CSM sales, respectively.

As raw material prices stabilize, we expect gross margin to improve 170 bps QoQ to 59.3%. We expect Divi's overall EBITDA to grow 23% QoQ to Rs 5.9 billion, with the EBITDA margin expanding 340 bps QoQ to 28.5%.

Equirus Capital

Key things that we would look out for are updates on approvals for additional capacity, commissioning of additional lines in custom synthesis capex, and progress towards manufacturing 10 new molecules.

PhillipCapital

Visible ramp up in Contrast media supply and recovery in API demand (although with stable pricing) may lead to 15% growth in sales. With no Molnupiravir sales in the base quarter and softening inputs as well as operating cost, margins may see 330 bps QoQ/450 YoY expansion in margins to 28.4%, resulting in 37% YoY growth in EBITDA.

Visible ramp up in new projects, the profits are likely to jump by 30%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)