Hyderabad-based drug maker Divi’s Laboratories is expected to report robust year-on-year growth in consolidated net profit when it declares its third quarter earnings on Friday, February 4.
A higher contribution from molnupiravir, an oral anti-viral treatment for COVID-19, and nutraceuticals, or nutritional supplements, as well as strong traction in contract manufacturing are expected to aid the growth.
Revenue is likely to grow 25-30 percent on year and 7-11 percent on a sequential basis in the December quarter.
Profit is forecast to be between Rs 610 and Rs. 700 crore during the quarter. On a sequential basis it is expected to improve between 1 percent and 10 percent.
The company that manufactures and custom-synthesizes generic active pharmaceutical ingredients (APIs), intermediates and nutraceutical ingredients, had posted a consolidated profit of Rs 471 crore in the same quarter a year ago on consolidated revenue of Rs 1,701 crore.
The company had recorded profit of Rs 606 crore in the second quarter of the current financial year on consolidated revenue of Rs 1,988 crore.
The stock has delivered returns of 15 percent during the past one year, but has been trading down 9 percent in this financial year as well as the past one month.
Kotak Institutional Equities expects 26 percent year-on-year growth in consolidated revenue “led by the synthesis segment growing at 36.6 percent on year benefitting from higher molnupiravir contribution while the generics business will grow 17 percent YoY.”
It expects the company to clock revenue of Rs 2,143 crore during the quarter, growing by 8 percent on a sequential basis.
Earnings before interest, tax, depreciation and amortization (EBITDA) are expected to increase ~31 percent on year, aided by a healthy product mix and backward integration which will offset higher fixed costs.
This will help improve the EBITDA margin by 160 basis points (bps) on year and 100 bps on quarter to 42.2 percent. One basis point is one-hundredth of a percentage point.
The improved margin will push the consolidated profit higher by 37 percent compared to the same period a year ago to Rs 643 crore. On a sequential basis, the increase in profit is likely to be ~6 percent.
Edelweiss Research expects revenue growth of 25 percent year on year, partially benefitting from molunupiravir supplies.
The securities firm pegs revenue at Rs 2,127 crore for the quarter, which is an increase of 7 percent over the previous quarter of this financial year.
“Gross margin and EBITDA margins are likely to remain at healthy levels of 66.5 percent and ~41 percent respectively, benefitting from backward integration of starting material and de-bottlenecking activities”, Edelweiss said in a report.
EBITDA is likely to grow by 26.7 percent on year and 7 percent over the previous quarter to Rs 876 crore while consolidated profit may rise ~30 percent on year to Rs 611 crore.
Compared to the previous quarter, the brokerage expects the profit to remain flat.
Motilal Oswal expects a more robust performance with revenue increasing by 30 percent on year and 11.5 percent on quarter to Rs 2,217 crore.
According to the securities firm, the revenue increase is likely to be fuelled by better traction in contract manufacturing. The EBITDA margin is likely to be ~42.2 percent and higher other income will increase the profit by ~41 percent on year to Rs 698 crore.
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