The pharmaceutical business Divi’s Laboratories announced a 64.5% YoY profit growth in Q3 FY25, powered by Custom Synthesis, which caused the share price to rise by 5%. Jefferies admits that revenue aligns with projections but worries about product concentration still exist.
Divi’s Laboratories Q3 Results:
A day after Divi’s Laboratories released its third-quarter (Q3) earnings for the fiscal year 2024–2025, its stock price increased by almost 5% in early trading on Tuesday.
According to data released by the firm on Monday, Divi’s Laboratories’ consolidated net profit (attributable to the company’s shareholders) for the fiscal third quarter that ended in December (Q3FY25) climbed by 64.5% year-over-year (YoY) to ₹589 crore. The business earned a ₹358 crore profit in the same previous year. The sequential rise in the consolidated net profit was 15.5%.
According to Jefferies India’s post-results, the bespoke synthesis business kept driving growth, but they are still worried about minimizing product concentration.
According to Jefferies, Divi’s Q3 sales were within their projections, and the company’s improved product mix led to higher earnings before interest tax, depreciation, and amortization (EBITDA).
While the generics division recovered in the quarter, custom synthesis remained the company’s primary growth driver. The brokerage stated that despite generic pricing still being under pressure due to increased volume throughout the quarter, the generalizes are still optimistic about GLP-1 (from a manufacturing perspective, GLP-1 offers three business areas). Jefferies stated that in FY27, it would have to overcome its product’s high concentration of Sacubitril Valsartan. As a result, it kept a “hold” rating with a ₹6,280 price target.
According to Motilal Oswal Financial Services, Divi’s Laboratories has strengthened its development drivers in Custom Synthesis by concentrating on subsegments like peptides and contrast media. Additionally, it is introducing more recent compounds into the generics market. To assist clients, it also develops capabilities for their future requirements. Additionally, the nearly ₹3600 crore in funds offered a sufficient buffer to forward projects if necessary. However, according to MOFSL, the stock’s present valuation provides little room for growth over its current levels, so it maintained its “neutral” rating.
