Divi’s Lab Q3FY23 preview: Consolidated net profit to likely drop 44% YoY

According to Kotak Institutional Equities, “We build in an overall YoY sales decline of 22 percent for Divi's in Q3FY23. The primary reason for this decline is lower Molnupiravir sales. Compared to the ~$130 million sales in Q3FY22, we estimate just ~$10 mn Molnupiravir sales by Divi's in Q3FY23. On an ex-Molnupiravir basis, we build in overall sales growth of 23 percent YoY fall on a low base.”

They expect generic API (Active Pharmaceutical Ingredient) and nutraceutical sales to grow 20 percent YoY and 15 percent YoY, respectively, in Q3FY23.

On a sequential basis, however, analysts at ICICI Securities expect revenue to grow at 10.4 percent, driven by fast-tracked projects while assuming EBITDA (Earnings before interest, taxes, depreciation and amortisation) margin to improve due to better operating leverage.

“After a weak margin performance in H1FY23, we factor in a sequential improvement of 300 bps in Divi's EBITDA margin to 36.5 percent in Q3FY23. This is despite the lower Molnupiravir contribution and will be driven by lower freight costs and our expectation of increased traction in the core business,” according to Kotak Institutional Equities.

As per the poll, EBITDA is estimated at Rs 703 crore, declining by 36 percent YoY and up 13 percent QoQ while EBITDA margin is projected at 35.5 percent.