Concall AI

Divi's Laboratories Limited — Q4 FY26 earnings call

Call held 23 May 2026

Management summary

Divi's Laboratories reported strong financial performance for FY26, with double-digit growth in revenue and profit after tax, driven by robust Nutraceuticals sales and improved operational efficiency. The company continued its strategic investments in capacity expansion, capitalizing ₹1,544 crores in assets. However, the business navigated challenges from geopolitical tensions, increased freight rates, and raw material price volatility, while managing pricing pressures in the generics segment.

Highlights

Consolidated total income for FY26 reached ₹11,067 crores, marking a 13.95% year-on-year growth from ₹9,712 crores in FY25.
Profit after tax for FY26 increased by 17.21% to ₹2,568 crores, up from ₹2,191 crores in FY25.
The Nutraceuticals business demonstrated strong growth, with revenue amounting to ₹946 crores in FY26, a 21.13% increase over ₹781 crores in FY25.
Material consumption as a percentage of sales revenue improved to 38.8% in FY26, down from 39.8% in FY25, indicating better operational efficiency.
The company capitalized ₹1,544 crores in assets during FY26, including ₹800 crores in Q4, reflecting ongoing strategic investments in capacity.

Concerns

Geopolitical tensions in West Asia caused disruptions in global trade routes, leading to congestion, extended transit times, and operational uncertainty for suppliers and logistics providers.
Freight rates for both ocean and air transportation increased considerably, and raw material prices saw a rise, which is expected to continue in the near term.
The generics segment continues to experience pricing pressures, although volumes have remained stable.

Key financials

2 periods

Q4 FY26

Total Income
₹2,986 Cr

FY26

Total Income
₹11,067 Cr
YoY +14%
Profit Before Tax
₹3,388 Cr
YoY +16.2%
Profit After Tax
₹2,568 Cr
YoY +17.2%
Nutraceuticals Revenue
₹946 Cr
YoY +21.1%
Material Consumption % of Sales
38.8%

What they filed

Q1 FY27: revenue up 26.2%, net profit up 60.0% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	2,302	2,297	2,536	2,357	2,660 +16%	2,578 +12%	2,793 +10%	2,974 +26%
Expenses	1,573	1,550	1,655	1,614	1,765	1,671	1,850	1,734
EBITDA	729	747	881	743	895 +23%	907 +21%	943 +7%	1,240 +67%
Margin	32%	33%	35%	32%	34%	35%	34%	42%
Other income	105	82	87	119	146	13	154	63
Interest	1	0	0	3	8	6	6	6
Depreciation	98	99	107	112	113	116	120	132
Profit before tax	735	730	861	747	920 +25%	798 +9%	971 +13%	1,165 +56%
Tax rate	30%	19%	23%	25%	24%	25%	22%	24%
Net profit	518	594	667	557	696 +34%	598 +1%	756 +13%	891 +60%
EPS	19.51	22.38	25.13	20.98	26.22	22.53	28.48	33.56

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence

Capex ₹800 Cr
- Capitalized assets for FY26 ₹1,544 Cr
- Kakinada expansion plan ₹1,500 Cr
During the year, the company capitalized assets worth 1,544 crores, out of which approximately 800 crores is capitalized in the last quarter. ... in fact, at Kakinada, we did mention earlier that we are going to do a 1,500 crores expansion plan, out of which ₹600 crores has been capitalized.
Liquidity Cash ₹3,414 Cr

As on March 31, 2026, the Company's Cash and Cash equivalents stood at ₹3,414 crores

Guidance & targets

Revenue

Revenue growth Revenue · future · Medium confidence double-digit growth

Now coming to the future outlook, we would say that as historically that we always look for a double-digit growth in our revenues, and that's what we would also say today.

— Nilima Prasad Divi

Margin

Margin outlook Margin · FY27 · Medium confidence remain stable

I mean with the change in scenarios, I would say it's difficult to project, but we would say it would remain stable. And we would -- like it's also with the situation we are currently in, we wouldn't want to throw a figure on that.

— Nilima Prasad Divi

Commercialization

Dedicated contract commercialization Commercialization · by 2027 · Low confidence by 2027 or earlier or maybe later

As of now, like I explained, we have gone through validation phases. We have supplied it to our customers. We are hopeful by 2027 it be commercialized or earlier or maybe later.

— Dr. Kiran S. Divi

Peptide Segment

Peptide facility scale Peptide Segment · future · Low confidence one of the largest global players in the world

I would say in terms of scale, I can give you a rough thing. We have several 3,000-liter SPPS, which by far in India nobody has. We are quite strong and committed towards this segment, and we are targeting to be one of the largest global players in the world.

— Dr. Kiran S. Divi

Capex

FY27 Capex Capex · FY27 · Medium confidence constant capex

I would say the capex for the following year, unless we see any major custom synthesis project or any new project that's in our way, it would be a constant capex.

— Nilima Prasad Divi

What to watch in Q1 FY27

Impact of freight-related cost pressures

next quarter

Current Expected to continue in the near term

Target Stabilization or decline in freight costs, or successful pass-through

Why it matters

Directly impacts cost of goods sold and overall profitability, especially given ongoing geopolitical tensions.

Freight-related cost pressures are expected to continue in the near term, and we have incorporated these factors into our planning for the coming quarters.

Risks & concerns

Geopolitical tensions and logistics disruptions
high

Escalation of geopolitical tensions in West Asia led to congestion at key ports, extended transit times, and operational uncertainty.

Management acknowledged
Raw material price volatility and increased freight rates
high

Freight rates and raw material prices increased considerably, with cost pressures expected to continue in the near term.

Management acknowledged
Generic pricing pressure
medium

The pricing environment in the generic business remains competitive, though volumes are stable.

Management acknowledged
Uncertainty in regulatory approval timelines for new products
medium

Commercialization of new projects, especially in custom synthesis and Gadolinium compounds, is dependent on customer regulatory approvals, which are unpredictable.

Management acknowledged

Q&A highlights

4 direct, 1 evasive

Supply chain issues and raw material availability, specifically methanol Direct

If you're asking me what we are currently going through, yes, we are having difficulty in sourcing material, but we are not having any production stoppages at our end. And it is not just methanol. We do import a lot of other solvents.

Addresses concerns about supply chain resilience and potential production halts due to geopolitical events and specific raw material shortages.

Asked by Surya Patra

FY27 capex plan and margin outlook given difficult scenarios Partial

Now coming to the future outlook, we would say that as historically that we always look for a double-digit growth in our revenues, and that's what we would also say today. ... I mean with the change in scenarios, I would say it's difficult to project, but we would say it would remain stable.

Provides directional guidance on revenue growth and margin stability, but management is cautious about specific numbers due to market uncertainties.

Asked by Surya Patra

Reasons for 6% constant currency growth despite significant capex and capacity Direct

We can't name that one single product, we are product heavy wherein it would pull down our revenue to a considerable extent, which would reflect in the balance sheet. Yes, we did mention Dr. Kiran Divi has mentioned earlier many times that the generic business has been quite strong volume-wise. But yes, there has been pricing pressures.

Clarifies that Divi's is a multiproduct company, not reliant on a single product, and attributes growth moderation to generic pricing pressures rather than capacity issues.

Asked by Amey Chalke

Margin trajectory and drivers for returning to historical 37-38% levels Partial

One is the generic pricing pressure for sure. And then the second one is mainly the cost of materials that has increased. ... So it's very difficult for me to say the timeline of any project. When it would come, when is the right time that these would jump in?

Explains the factors (generic pricing, material costs) that have compressed margins and highlights the uncertainty in predicting when margins might recover, linking it to project timelines.

Asked by Amey Chalke

Raw material cost inflation and ability to pass on costs in the generic segment Direct

the generic segment, while the raw material prices, we are not immune to it, we are seeing rise in raw material prices. But we have -- mo most of our APIs on the generic segment are backed by long-term contracts, which have variability clauses, which protects us from such situations.

Reassures investors that long-term contracts with variability clauses provide a mechanism to mitigate the impact of rising raw material costs in the generic segment.

Asked by Neha Manpuria

Status of Iodine and Gadolinium contrast media projects Direct

Coming to the Contrast Media, we are working with the big pharma companies. ... Coming to Gadolinium compounds, we are still at qualification stage because these are new molecules which are in Phase II, Phase III. ... In the Iodine base, we are already in commercial sales.

Provides a clear update on the progress of key contrast media projects, distinguishing between commercialized Iodine products and Gadolinium compounds in earlier development stages.

Asked by Abhigyan Srivastav

Timelines for dedicated capacity utilization and associated regulatory processes Partial

As and when the customers get their regulatory approvals, either from -- I don't know which countries and how they would apply. We will be a part of their filing, we cannot comment on their regulatory submissions. ... So it is very difficult for us to predict saying, okay, in the next 1 year we will see these being shown up into the revenue stream.

Highlights the dependency on customer regulatory approvals and the inherent unpredictability of timelines for new project commercialization, which impacts revenue realization from capex.

Asked by Ritika

Regulatory agencies' inspection process for API/intermediate facilities Evasive

To answer that question is very difficult, right. So I cannot assume what the agency would be thinking, whether after my customer submits a file, whether they would prefer to audit us or they're happy with the previous audit report or they want to do a product-specific report, and then come for an audit again. I cannot comment on that because that's a regulatory agency decision, right.

Management explicitly states inability to comment on regulatory agency decisions regarding audits, indicating a lack of control or visibility into this critical aspect of product approval.

Asked by Kunal Dhamesha

2 min read 6 chapters

Detailed narrative

Robust Financial Performance in FY26

Divi's Laboratories delivered a strong financial performance for the fiscal year 2026, with consolidated total income reaching ₹11,067 crores, representing a 13.95% year-on-year growth from ₹9,712 crores in FY25. Profit before tax increased by 16.19% to ₹3,388 crores, and profit after tax saw a 17.21% rise to ₹2,568 crores compared to the previous year. The company also reported a forex gain of ₹211 crores for the year, significantly higher than the ₹48 crores recorded in FY25.

Operational Efficiency and Product Mix

The company demonstrated improved operational efficiency, with material consumption as a percentage of sales revenue decreasing to 38.8% in FY26 from 39.8% in FY25. Exports remained a significant contributor, accounting for nearly 89% of total sales revenue, with Europe and the United States making up approximately 74% of export revenue. The product mix for FY26 was 45% generics and 55% custom synthesis, reflecting a balanced portfolio, and the company achieved a constant currency growth of 6.82%.

Growth in Nutraceuticals and Strategic Investments

The Nutraceuticals business continued its strong growth trajectory, with revenue for FY26 amounting to ₹946 crores, a 21.13% increase from ₹781 crores in the previous fiscal year. Divi's also made substantial strategic investments, capitalizing assets worth ₹1,544 crores during FY26, including ₹800 crores in the fourth quarter. Capital work in progress stood at ₹2,113 crores as of March 31, 2026, which includes a ₹1,500 crores expansion plan at Kakinada, with ₹600 crores already capitalized.

Navigating Supply Chain and Cost Headwinds

The company faced significant external challenges, including disruptions from geopolitical tensions in West Asia, which led to port congestion, extended transit times, and operational uncertainty. These factors, coupled with increased freight rates and rising raw material prices, impacted costs. While management acknowledged these pressures, they emphasized proactive procurement, strong logistics partnerships, and long-term contracts with variability clauses to mitigate the impact and maintain supply reliability.

Progress in Contrast Media and Peptide Segments

Divi's is actively advancing its contrast media portfolio, with Iodine-based products already in commercial sales with major pharma innovators. For Gadolinium compounds, the company is in the qualification stage for Phase II/III molecules, awaiting customer regulatory approvals for commercialization. In the peptide segment, Divi's is deepening its capabilities, validating fragments, and aims to become one of the largest global players, supported by its advanced 3,000-liter Solid Phase Peptide Synthesis (SPPS) units.

Outlook on Revenue Growth and Margin Stability

Management expressed an outlook for double-digit revenue growth in the future, maintaining that margins would remain stable despite the challenging environment. They noted that the timeline for commercialization of new projects, particularly in custom synthesis and GLP-1, is highly dependent on customer regulatory approvals and volume indications, making precise predictions difficult. The company expects a 'constant capex' for FY27 unless new major custom synthesis projects emerge.

This is an AI-generated summary of a publicly available earnings call transcript.

View original transcript