- 27 May 2024
- ICICI Securities
DIVI’S Q4FY24 RESULTS- STRONG RECOVERY IN CS; GENERICS STILL MUTED
DIVISLAB - 5840 Change: -84.05 (-1.42 %)News: Revenues were up ~18% YoY at ₹ 2303 crore mainly driven by ~47% growth in Custom Synthesis (CS) to ₹ 1175 crore and 25% growth in Nutraceuticals to ₹ 188 crore. However, APIs de-grew ~6% to ₹ 941 crore. Gross margins improved ~326 bps YoY to 60.8% mainly due to better products mix (higher CS sales). EBITDA improved ~50% YoY to ₹ 731 crore whereas EBITDA margins increased 675 bps to 31.7%. Adjusted PAT increased ~69% YoY to ₹ 538 crore.
Views: Significant growth in CS was attributable to some phase three projects getting commercialised in Q4 besides traction from two recently added projects. On the API front, the de-growth was attributable to persistent pricing pressure which, the management believes is likely to sustain for some time but there was volume growth witnessed even in some of the legacy products like Naproxen. 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 Q2FY25. The management expects double digit growth in FY25 and expects gradual margin improvement through efficient supply management, backward integration etc. We continue to monitor progress on the consistency of CS traction and recovery in the APIs.
Impact: Positive