Release Date: February 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Divi's Laboratories Ltd (BOM:532488, Financial) reported a significant increase in consolidated total income for Q3 FY25, reaching INR2,401 crores compared to INR1,915 crores in the same quarter of the previous year.
- The company successfully commenced commercial operations at its Phase I greenfield project at Unit 3 in Kakinada, enhancing backward integration and manufacturing capabilities.
- Divi's Laboratories Ltd (BOM:532488) maintained stability in its generic business despite ongoing industry price pressures, with expectations for easing pressures and future growth driven by patent expirations.
- The nutraceutical division continues to gain market share, with efforts in production efficiencies and new product introductions aligning with long-term growth strategies.
- The company has a strong cash position with INR3,659 crores on books, supporting its strategic investments and operational efficiency initiatives.
Negative Points
- Divi's Laboratories Ltd (BOM:532488) faces ongoing price pressures in the generic segment, impacting overall revenue growth despite volume increases.
- Logistical challenges, including disruptions in the Red Sea and port congestion, led to increased costs and delays, although the company managed to mitigate impacts through strategic actions.
- The company is experiencing a gradual easing of supply chain pressures, but geopolitical and shipping conditions continue to pose risks.
- Despite a strong pipeline, the timing of contributions from new projects in the custom synthesis segment is uncertain due to dependency on regulatory approvals.
- The nutraceutical business has seen stagnated momentum due to capacity constraints, although future growth is anticipated with the Kakinada expansion.
Q & A Highlights
Q: Could you provide an update on the contrast media segment and how Divi's is positioning against the competition?
A: Kiran Divi, CEO, explained that Divi's is working on iodine-based and gadolinium compounds in the contrast media segment. They are collaborating with innovators at various stages, including qualifications and commercial discussions, and expect to be strong in iodine-based products.
Q: Considering potential changes in US trade policy, what risks do you foresee regarding tariffs, and how are you mitigating these risks?
A: Nilima Divi, Whole-Time Director (Commercial), stated that currently, there are no tariffs affecting India. They are monitoring the situation and will take strategic decisions if necessary. Exports to Europe also provide an advantage.
Q: How do you plan to ramp up the Kakinada facility, and when should we expect it to contribute to revenue?
A: Kiran Divi, CEO, mentioned that the Kakinada facility is being implemented in phases, with Phase I expected to be commercialized in six months. Initially, starting materials will be moved there, freeing up capacity at other units for existing opportunities.
Q: What is the outlook for the custom synthesis business, and are there any milestones to watch for?
A: Kiran Divi, CEO, highlighted that Divi's has several opportunities in custom synthesis, with projects at various stages. They are proactive in pursuing opportunities and expect growth, but specific timelines depend on regulatory approvals.
Q: Can you provide insights into the nutraceutical business and its growth prospects?
A: Nilima Divi, Whole-Time Director (Commercial), noted that the Kakinada site will support backward integration and expansion in nutraceuticals. They are addressing capacity constraints and expect growth as the site becomes operational.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
