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Home >Markets >Stock Markets >Divi's Lab gains 4% after a strong March quarter performance

MUMBAI: Shares of Divi's Laboratories rose a little over 4% after the company announced 29.3% year-on-year rise in its consolidated net profit to Rs502.02 crore for the quarter ended March.

At 12pm, shares of the company traded at Rs4169.10 apiece, up 1.28% from previous close. The benchmark Sensex was up 0.7% at 51788.18.

Net sales grew 28.7% year-on-year to Rs1,788.19 crore in Q4 FY21. The company reported a forex gain of Rs3 crore during the quarter under review.

During FY21, the company took up another capex programme at an estimated investment of Rs400 crore, for fast-tracking a customs synthesis project. A part of the project has been completed and became operational. The rest will be completed this financial year.

Analysts at Motilal Oswal Financial Services said new product development, ongoing capex, and strong prospects in custom synthesis (CS) provided confidence that the momentum in earnings growth will sustain over the next 2-3 years.

"Raise FY23 earnings per share estimate by 4% based on scale-up in CS projects, enhanced capacity for APIs in the Generics segment, and better profitability on account of backward integration". The brokerage has a buy rating supported by promising demand prospects and multiple growth levers.

During the financial year 2020-21, the company capitalised assets worth Rs1,183.51 crore, and an amount of Rs710.62 crore was carried forward as capital work-in-progress at the end of the year.

The new brownfield DC and DCV SEZ units and the debottlenecking / backward integration programs taken up by the company during the last year, have become fully operational during the year.

"Q4 topline was in line with I-direct estimates whereas profitability was higher than expected amid better gross margin performance. More than strong quarterly performance (the management stresses in a business like this can be lumpy) important narrative for Divi’s is unprecedented capex to further augment capacities besides preparing for growing opportunities arising from China plus one factor," ICICI Securities said in result update.

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