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Divi's Laboratories — Q2 FY24
Divis Laboratories reported Q2 FY24 consolidated PAT of INR 348 crore on total income of INR 1,995 crore, with export share at 87%.
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Divis Laboratories reported Q2 FY24 consolidated PAT of INR 348 crore on total income of INR 1,995 crore, with export share at 87%. Revenue growth excluding COVID portfolio was double-digit YoY, but constant currency growth was negative 1% due to pricing pressure in generics. Custom synthesis business is benefiting from two large Big Pharma projects now at full capacity, while contrast media and peptide building blocks (GLP-1 agonists) represent key growth engines. Unit Three greenfield project is on track for production start by Q1 FY25. Management expects pricing pressure in generics to be cyclical and resolve within two years. Risk: inventory destocking in generics may persist longer than anticipated, pressuring margins.
डिविस लैबोरेटरीज ने दूसरी तिमाही में कुल कमाई 1,995 करोड़ रुपये और मुनाफा 348 करोड़ रुपये बताया। 87% कमाई निर्यात से आई। कोविड दवाओं को छोड़कर बिक्री बढ़ी, लेकिन जेनेरिक दवाओं पर कीमत दबाव के कारण वास्तविक वृद्धि 1% घटी। कस्टम सिंथेसिस कारोबार को दो बड़ी कंपनियों के प्रोजेक्ट से फायदा हो रहा है, जो अब पूरी क्षमता पर चल रहे हैं। कंट्रास्ट मीडिया और पेप्टाइड बिल्डिंग ब्लॉक्स (जीएलपी-1) नए विकास के मुख्य स्रोत हैं। यूनिट तीन का नया प्रोजेक्ट अगले साल की पहली तिमाही में उत्पादन शुरू करेगा। कंपनी को उम्मीद है कि जेनेरिक दवाओं पर कीमत दबाव दो साल में खत्म होगा। जोखिम: जेनेरिक दवाओं का स्टॉक खत्म होने में देरी हो सकती है, जिससे मुनाफा कम हो सकता है।
Promises0 met · 1 missedRisks4 trackedTranscriptfull text
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Pricing pressure in generics may persist
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Read Transcript →Quarter Snapshot
Export to Europe and US
68%
N/A
Export to Europe and US was 68% for the quarter, indicating continued reliance on these markets.
Generics to Custom Synthesis Mix
60:40
N/A
Product mix shifted to 60% generics and 40% custom synthesis, reflecting growth in generics volume.
Nutraceutical Revenue
INR 205 crore
+15% QoQ
Nutraceutical business grew 15% sequentially, driven by astaxanthin and animal nutrition products.
Capital Work in Progress
INR 496 crore
N/A
Capex in progress includes INR 263 crore for Kakinada project, supporting future capacity expansion.
What Changed vs Last Quarter
NEW
Unit Three production to start by Q1 FY25
Phase one of the 200-acre greenfield project at Kakinada is progressing and expected to commence production towards the end of Q1 FY2024-25.
NEW
Custom synthesis growth from Big Pharma projects in coming quarters
Two large custom synthesis projects are now at full production capacity, with revenue contribution expected to be visible in the next quarters.
NEW
Peptide building blocks revenue visible by FY25
Revenue from GLP-1 agonist peptide building blocks is expected to start in FY25, with larger volumes thereafter.
NEW
Contrast media gadolinium product supply likely in FY25
Gadolinium-based contrast media process is in final stages; customer approvals and supplies are expected more towards FY25.
DROPPED
Steady-state EBITDA margin of 35-40%
Management expects EBITDA margins to stabilize in the 35-40% range over the long term, excluding COVID-related distortions.
DROPPED
Double-digit revenue growth over medium term
Management anticipates double-digit revenue growth going forward, driven by custom synthesis, contrast media, and Sartans.
DROPPED
Unit III greenfield project to commercialize by mid-FY25
The Unit III project in Kakinada, with an initial investment of INR 1,500 crore, is expected to start commercial production by mid-2025.
DROPPED
MRI contrast media validation by end of FY24
Validation for some MRI contrast media products is expected to be completed by the end of the current financial year, enabling customer sampling.
NEW RISK
Inventory write-offs from COVID leftovers
INR 20 crore inventory write-off was taken for COVID-related materials, indicating potential for further write-offs if demand does not recover.
NEW RISK
Custom synthesis growth not yet visible YoY
Despite management optimism, custom synthesis revenue appears flat YoY when adjusting for COVID sales, raising questions about growth trajectory.
NEW RISK
Geopolitical and economic fluctuations
Management cited potential consequences from ongoing geopolitical and economic fluctuations, though no specific impact was quantified.
RISK GONE
Raw material price volatility
While raw material prices are currently softening, management noted that price variations could recur, especially for solvents like acetonitrile.
RISK GONE
Dependence on custom synthesis project ramp-up
Custom synthesis growth depends on customer approvals and project timelines, which are uncertain and not quarter-to-quarter predictable.
Fast read
Guidance and risk preview
Phase one of the 200-acre greenfield project at Kakinada is progressing and expected to commence production towards the end of Q1 FY2024-25.
Management acknowledged pricing pressure in large volume generics due to inventory destocking by mid-to-small players, which could last up to two y...
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