Drugmaker Divi's Laboratories is slated to release its April-June results on August 3. The low base of the last fiscal and strong sales in the custom synthesis segment are expected to drive profit and revenue growth for Divi's.
According to a Moneycontrol poll of nine brokerages, Divi's Labs' revenue is pegged to grow 16.5 percent to Rs 2,129 crore in the first quarter of the current fiscal, up from Rs 1,778 crore reported in the same period a year ago. Net profit is expected to increase over 32 percent to Rs 471 crore as against Rs 356 crore in the year-ago period.
Growth expectations for the CDMO player span a vast range as the most optimistic brokerages are predicting as much as 61 percent on year growth while the most pessimistic are baking in forecasts of just 10 percent increase.
Among brokerages, Kotak Institutional Equities has forecast the strongest profit growth for Divi's Labs, anticipating the drugmaker to benefit from the two big projects commercialised in Q3 of FY24.
At the far end, Nuvama Institutional Equities expects the lowest profit growth for Divi's on account of expectations of moderate growth in the custom synthesis business.
What factors are driving the earnings?
Analysts expect Divi's Labs to enjoy the benefit of a low base. On top of that, commercialisation of two big projects and improved sales of the generics and nutraceutical business are expected to drive earnings growth.
Growth in custom synthesis business: The drugmaker has commercialised
two new drugs in the custom synthesis segment recently, which, according to BNP Paribas, would be the biggest earnings driver for the company. KIE also expects CSM sales to grow by a whopping 71 percent on year, owing to higher Sacubitril (antihypertensive drug) supplies and the commericalisation of two new drugs.
Growth in generics and nutraceuticals: According to SMIFS Ltd, Divi's' generics and nutraceuticals businesses are expected to grow in low-double digits, which will provide another push to the company's earnings growth in Q1.
What to look out for in the quarterly show?
Given the distorted margin profile of the company in the past year due to industry headwinds and the absence of high-margin drug Molnupiravir, the focus will be on Divi's guidance for EBITDA margin for FY25.
In addition, any outlook from the management over growth triggers for the company's API business will also remain another key monitorable.
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