HYDERABAD (Reuters) – India’s Divi’s Laboratories reported a better-than-expected quarterly profit on Monday, aided by strong performance of its business that focuses on customised production of chemical compounds used in drugs, sending its shares higher.
The company’s consolidated net profit jumped 64.5% to 5.89 billion rupees ($67.6 million) in the third quarter, slightly above analysts’ estimates of 5.13 billion rupees, as per LSEG data.
The Hyderabad-based drugmaker’s shares reversed course from a 0.2% dip to trade 3.3% higher after the results.
Divi’s is one of India’s largest manufacturers of active pharmaceutical ingredients (API), key components of a drug that produce the intended therapeutic effects. Its client list spans more than 100 countries and includes major drugmakers such as Novartis.
Its revenue from operations climbed 25% to 23.19 billion rupees during the quarter, roughly in line with analysts’ estimate of 23.43 billion rupees.
The company also provides contract development and manufacturing (CDMO) services. Divi’s and its local peers stand to gain as major drugmakers are diversifying their supply chain to limit their reliance on China.
Divi’s, in particular, has said it is also banking on demand from obesity drug manufacturers as they scramble to meet skyrocketing customer demand.
However, its generics business, much like those of its peers, is facing pricing pressure, a situation it hopes will stabilise this year. ($1 = 87.1190 Indian rupees)
(Reporting by Rishika Sadam and Kashish Tandon; Editing by Rashmi Aich and Savio D’Souza)
