Divi's Labs Q1 results preview: Net profit likely to fall 43%, margin may fall by 10 percentage pts

Pharmaceutical company Divi's Laboratories is scheduled to report its financial results for the April-June period on Monday, August 14. Analysts expect the company to register a weak performance owing to a high base and margin pressure due to a high-priced raw material inventory.

According to Zee Business research, Divi's Labs is likely to report a consolidated net profit of Rs 403 crore for the first quarter of the current financial year, which translates to a fall of 42.6 per cent compared with the corresponding period a year ago. The analysts estimate the drug maker's revenue for the three-month period to contract 10.4 per cent on a year-on-year basis to Rs 2,021 crore.

The Hyderabad-based company is expected to report Rs 558 crore in earnings before interest, taxes, depreciation and amortisation (EBITDA) as against Rs 847 crore for the year-ago period, according to the research.

Zee Business analysts peg its margin — a key measure of a business's profitability — at 28 per cent for the quarter ended June 2023, a fall of 1,000 basis points (10 percentage points) from 38 per cent for the quarter ended June 2022. They expect its generic active pharmaceutical ingredients (API) business to grow 17 per cent and its nutraceutical unit to expand two per cent on a year-on-year basis.

How Divi's Labs performed in the year-ago period

For the quarter ended June 2022, the drug maker had reported a 26 per cent year-on-year jump in net profit to Rs 702 crore with 15 per cent growth in revenue to Rs 2,254.5 crore. 

Divi's Labs shares

Divi's shares grew 26.8 per cent in the June quarter, sharply outperforming a 10.5 per cent rise in the benchmark Nifty index. 

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