Divi's Lab.

Divi's Laboratories reported a consolidated total income of ₹2,860 crores for Q2 FY26, marking a 17% increase year-on-year from ₹2,444 crores. Profit before tax rose to ₹912 crores, up from ₹722 crores in Q2 FY25, while profit after tax saw a significant jump of 35.1% to ₹689 crores. For the first half of FY26, total income reached ₹5,389 crores, a 16% increase from the previous fiscal year's ₹4,640 crores.

The generic API segment continues to experience pricing pressures, resulting in a low single-digit decline, though the company has maintained consistent volumes and customer base. To manage input costs effectively and sustain market share, Divi's leverages its backward integration model, with Unit 3 in Kakinada supporting in-house production of starting materials and intermediates. Management hopes for stabilization in the generic business within the next few quarters, but anticipates no improvement in price erosion for the next two quarters.

Custom synthesis remains a strong growth driver, contributing 56% to the product mix in Q2 FY26. The company is seeing high engagement levels with global innovators, with multiple projects advancing through development and validation stages. Commercial manufacturing from some of these projects is expected to commence within the next 1 to 2 years, contingent on regulatory approvals. Divi's emphasizes its long-term customer relationships and comprehensive capabilities beyond just pricing as key competitive advantages.

Divi's is experiencing strong momentum in peptide synthesis, having inaugurated a peptide center of excellence and actively engaging with big pharmas on Phase I, II, and III programs. The long-term strategy aims to establish Divi's as a world leader in complex peptide manufacturing. Additionally, the nutraceutical segment contributed ₹242 crores in Q2 FY26 and ₹492 crores in H1 FY26, leveraging its manufacturing strength in carotenoids and other value-added ingredients to capitalize on the growing global focus on health and wellness.

The company is executing three major capex programs backed by long-term supply commitments. H1 FY26 capex spend was ₹1,550 crores, and the full-year FY26 capex is projected to be higher than the initial guidance of ₹2,000 crores. These investments are focused on implementing new technologies like flow chemistry, biocatalysis, and green chemistry, expanding capacities, and advancing key strategic projects to enhance sustainability and efficiency.

Unit 3 in Kakinada, which became operational earlier this year, is crucial for supporting Divi's supply chain by enabling in-house production of starting materials and intermediates. This also frees up GMP-compliant capacity at other units. The company plans to begin qualification of in-house APIs at Unit 3 in the near future, with appropriate qualifications and Drug Master File submissions expected in the next few quarters, moving towards regular GMP production.

Divi's is actively progressing on its Contrast Media scale-up, working on validations with major players and expecting commercialization soon. For Gadolinium compounds, the company is collaborating with innovators on Phase III molecules, but regulatory approvals are anticipated to take at least one year before any results are seen. Management remains hopeful for positive outcomes in both these specialized areas.

Divi's continues its commitment to community development through various initiatives. Education programs reach thousands of students, and efforts in providing safe drinking water have reached 8 lakh people. The company emphasizes inclusive development through targeted interventions in nutrition, infrastructure, and scholarships, reflecting its belief in business success hand-in-hand with social progress.