Divi’s Laboratories Ltd: Q3 FY25 Earnings, 64.5% Profit Growth & Stock Surge
Divi’s Laboratories Ltd: Overview
Divi’s Laboratories Ltd., a major global API (Active Pharmaceutical Ingredients) manufacturer, was founded in 1990 as Divis Research Center, focusing initially on Research & Development. Today, it stands as one of the largest API companies worldwide, specializing in Intermediates, Nutraceuticals, and custom synthesis for innovator pharmaceuticals. It has a significant export-oriented business, with a presence in over 100 countries, supplying around 160 diverse products. Divi’s Laboratories Ltd. has achieved significant milestones in its growth and operations. In 2006-2008, the company developed Divi’s Pharma SEZ in Visakhapatnam for Nutraceuticals production, expanding its custom synthesis and Nutraceuticals portfolio to meet rising export demand. In 2011, Divi’s launched the DSN SEZ Unit at Visakhapatnam, increasing production capacity in generic and custom synthesis segments. From 2014-2018, Divi’s Laboratories passed multiple international regulatory inspections, including from the US FDA and COFEPRIS (Mexico), establishing EIR status for Unit-II, Visakhapatnam, which addressed previous regulatory concerns. These projects boosted Divi’s role in generic and big pharma markets. In line with its dedication to innovation and compliance, Divi’s has research centers in Hyderabad and at manufacturing sites, focusing on custom synthesis and process innovations. With two subsidiaries Divi’s continued investments in R&D, global regulatory compliance, and strategic expansion reinforce its commitment to high-quality pharmaceutical solutions, positioning it as a prominent player in the global API market.
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The Phase 1 Green 3 project commenced its operations in January 2025, marking a significant milestone for Divi’s Laboratories by enhancing its production capacity. However, logistical challenges arose due to restrictions and disruptions in the Red Sea, forcing transportation to be rerouted through South Africa, which significantly increased logistics costs during the quarter. Despite these temporary cost pressures, freight expenses are anticipated to ease in the coming years, aided by Divi’s strong client relationships that have ensured customer retention. Material consumption remained stable, accounting for approximately 40% of the total revenue for the reporting period. Export revenue continued to be a key driver of overall earnings, contributing nearly 80% to total revenue, with shipments to Europe and the United States making up 87% of total exports. The company’s Nutraceuticals segment demonstrated notable growth, gaining market share within its category and generating revenue of ₹170 crore. Additionally, Divi’s Laboratories has an ongoing capital work in progress amounting to ₹1,170 crore, earmarked as capital expenditure for the current fiscal year, with ₹735 crore specifically allocated for the Kakinada project. The first phase of the Kakinada project is expected to be operational within six months, further strengthening Divi’s long-term growth prospects. As of December 31, 2024, the company reported a strong financial position with ₹3,659 crore in cash reserves. In the generics business, despite industry-wide pricing pressures, Divi’s has maintained stability through strategic pricing measures. Additionally, the company has implemented a well-structured inventory buffer, ensuring a diversified and uninterrupted supply chain that supports continued growth and resilience against market fluctuations.
Business Segments
- Generic APIs: Divi’s is a leading manufacturer of generic APIs, catering to pharmaceutical companies worldwide. It specializes in high-value APIs such as Naproxen, Dextromethorphan, Gabapentin, and Levetiracetam. The company’s backward integration and cost-efficient manufacturing give it an edge in this segment.
- Custom Synthesis: This segment involves contract manufacturing and development services (CDMO) for global pharmaceutical companies. Divi’s provides specialized synthesis solutions for patented molecules and intermediates used in drug development.
- Nutraceuticals: Divi’s has expanded into the growing Nutraceuticals market, offering high-quality carotenoids, vitamins, and other health supplements. The segment aligns with increasing consumer preference for wellness products and functional foods.
- Peptide and Oligonucleotide Manufacturing: With advancements in biotechnology, Divi’s has ventured into the synthesis of peptides and oligonucleotides, which are critical for new-generation therapeutics, including RNA-based drugs.
Subsidiary Information
- Divi’s Laboratories (USA) Inc.: Divi’s Laboratories (USA) Inc. serves as the company’s North American arm, focusing on marketing and distribution of pharmaceutical products across the United States and neighboring countries. This subsidiary ensures that Divi’s Laboratories can effectively cater to the significant demand in the U.S. market, which is one of the largest consumers of pharmaceuticals globally.
- Divi’s Laboratories Europe AG: Based in Switzerland, Divi’s Laboratories Europe AG is instrumental in managing the company’s operations across Europe. This subsidiary handles the marketing, distribution, and regulatory compliance of Divi’s products within European markets. The subsidiary’s strategic location in Switzerland provides logistical advantages and facilitates better engagement with European clients and regulatory bodies.
- Divi’s Nutraceuticals: Divi’s Nutraceuticals is a specialized division dedicated to the production and marketing of Nutraceuticals ingredients, including a wide range of carotenoids and vitamins. Divi’s Nutraceuticals emphasizes research and development to innovate and expand its product offerings, aligning with consumer trends towards preventive healthcare and nutrition.
- Divi’s Research and Development Centers: While not traditional subsidiaries, Divi’s multiple R&D centers across India function as specialized units focusing on the development of new processes, technologies, and products. The R&D centers ensure that Divi’s Laboratories remains at the forefront of pharmaceutical innovation, maintaining its competitive edge in the global market.
- Divi’s Manufacturing Units: Divi’s Laboratories operates several manufacturing units in India, each functioning as a critical component of its production infrastructure. These units are located in Telangana and Andhra Pradesh and are equipped with state-of-the-art technology to produce a wide range of APIs and intermediates. The manufacturing units adhere to stringent quality standards and have received approvals from major regulatory agencies worldwide.
Q3 FY25 Earnings
- Revenue of ₹2297 crore in Q3 FY25 up by 23.9% YoY from ₹1855 crore in Q3 FY24.
- EBITDA of ₹730 crore in this quarter at a margin of 32% compared to 26% in Q3 FY24.
- Profit of ₹594 crore in this quarter compared to a ₹358 crore profit in Q3 FY24.
Financial Summary
| Amount in ₹ Cr | Q3 FY24 | Q3 FY25 | FY23 | FY24 |
| Revenue | 1855 | 2297 | 7757 | 7845 |
| Expenses | 1366 | 1649 | 5397 | 5635 |
| EBITDA | 489 | 730 | 2370 | 2210 |
| OPM | 26% | 32% | 31% | 28% |
| Other Income | 95 | 82 | 344 | 335 |
| Net Profit | 358 | 594 | 1824 | 1600 |
| NPM | 19.3% | 25.9% | 23.5% | 20.4% |
| EPS | 13.5 | 22.4 | 68.7 | 60.3 |