Hyderabad-based drug maker Divi’s Laboratories Ltd, on February 11, reported a consolidated profit after tax (PAT) of Rs 902 crore for the third quarter ended December 2021, up by 92 percent from the profit of Rs 471 crore reported in the corresponding quarter a year ago. On a sequential basis, the profit is higher by 49 percent from a PAT of Rs 606 crore reported in the previous quarter.
Consolidated revenues for the company that manufactures and custom-synthesizes generic active pharmaceutical ingredients (APIs), intermediates and nutraceutical ingredients stood at Rs 2,493 crore, up by 47 percent compared to Rs 1,701 crore reported a year-ago. Revenues in the preceding quarter stood at Rs 1,988 crore.
13.4% dip in daily COVID-19 cases, 11.7% drop in active cases in a day
The growth was driven by a strong traction in contract manufacturing as well as higher contribution from molnupiravir, an oral anti-viral treatment for COVID-19 and nutraceuticals or nutritional supplements.
Operational Performance
Operationally, it was a good quarter for the company as it was able to reap the benefits of operational efficiency and better product mix.
The cost of raw materials as percentage of operating revenues reduced by 380 bps on year and by 796 bps quarter on quarter to 36.1 percent.
The company was able to save on employee costs as the contribution of employee costs as percentage of revenue from operations declined 390 bps on year and 146 bps QoQ to 9.8 percent.
Other expenses also witnessed a decline both on year and on sequential basis as they declined by 190 bps compared to the same period a year ago and by 180 bps compared to the previous quarter.
Consequently, the EBITDA (earnings before interest, tax, depreciation and amortization) for the company jumped 59 percent on year to Rs 1,097 crore from Rs 691 crore registered during the same period a year ago. Compared to the previous quarter, EBITDA has improved by 34 percent from Rs 818 crore.
EBITDA margins for the reported quarter came in at 44 percent which is 340 bps higher year on year and 285 bps higher sequentially.
The higher EBITDA margins coupled with lower depreciation and finance costs aided the company to improve its net margins by 850 bps on year to 36.2 percent from 27.7 percent achieved during the same period last year. Sequentially, the net margins are higher by 570 bps.
Forex Gain/Loss
The company incurred a loss of Rs 3.1 crore during the quarter on account of forex variations. In the corresponding period a year ago, there was a gain of Rs 2.53 crore on account of forex. In the previous quarter of this fiscal too, there was a forex loss of Rs 7.1 crore. In the first 9 months of the reported year however, the company has gained Rs 9.4 crore against a loss of Rs 8.3 crore in the same period a year ago.
The stock of Divi’s Laboratories opened flat at Rs 4,313.75 at the National Stock Exchange on February 11. During the past one year, the stock has generated returns of 16 percent.
The markets cheered the good results of the company as the stock was trading Rs 31.4 higher at Rs 4,345 in the afternoon session.
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