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- 12 Feb 2024
- ICICI Securities
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TRACTION IN CUSTOM SYNTHESIS BUT MARGINS STILL BELOW-PAR
DIVISLAB - 6732 Change: -59.00 (-0.87 %)News: Revenues were up ~9% YoY at Rs 1860 crore mainly driven by ~25% growth in Custom Synthesis (CS) to Rs 853 crore. However, APIs de-grew ~2% to Rs 848 crore and so was Carotenoids which de-grew 4% YoY to Rs 153 crore. Gross margins improved ~~400 bps YoY to 60.7% mainly due to better products mix (higher CS sales). EBITDA improved ~20% YoY to Rs 489 crore whereas EBITDA margins increased 245bps to 26.4%. Adjusted PAT increased ~31% YoY to Rs 358 crore.
Views: Significant growth in CS notwithstanding, the overall print was still below the consensus estimates on the API and EBITDA margins front which are languishing between 24-28% range for the last five quarters. On the API front, the management expect meaningful recovery two-three quarters down the line as the prices continue to remain under pressure due to customers destocking. Things are looking promising on the CS front with continued traction from two contrast media products besides promising projects in peptides and GLP-1 (dedicated facility. The Kakinada is likely to start production in Q2FY25. We continue to monitor progress on the margins front.
Impact: Neutral