- 11 Nov 2024
- ICICI Securities
DIVI’S Q2FY25 - STRONG CS MOMENTUM CONTINUES; GENERICS STILL MUTED
News: Revenues were up ~23% YoY at ₹ 2338 crore mainly driven by ~62% growth in Custom Synthesis (CS) to ₹ 1235 crore. Generics (APIs) on the other were flat at ₹ 917 crore due to continuing pricing pressure in key legacy molecules. EBITDA improved ~50% YoY to ₹ 716 crore whereas EBITDA margins increased 110 bps to 29.4% due lower total expenses. Adjusted PAT increased ~21% YoY to ₹ 430 crore.
Views: Significant growth in CS was attributable to some phase three projects getting commercialised in Q4 and Q1 besides traction from two recently added projects. On the API front, the de-growth was attributable to persistent pricing pressure in legacy products like Naproxen, Dextromethorphan, Gabapentin among others which, the management believes is likely to sustain for some time but there was double digit volume growth witnessed in some APIs. Things are looking promising on the CS front with continued traction from two contrast media products besides promising projects in peptides and GLP-1. The ₹ 650-700 core investment for a dedicated plant for a CS project is likely to consummate in 2027. The Kakinada is likely to start production in Q3FY25. We continue to monitor progress on the consistency of CS traction and recovery in the APIs.
Impact: Positive