Divi's Laboratories Ltd.Strong Q1 with Major Capex Nearing

Divi's Laboratories delivered an impressive Q1 FY27 performance with consolidated revenue growing 24.3% year-on-year to ₹3,144 crores, while profit after tax surged 65.5% to ₹902 crores.

The exceptional profitability was driven by a favorable business mix with Custom Synthesis contributing 60% of revenue versus Generics at 40%. Management reaffirmed its double-digit growth guidance for FY27 despite headwinds from doubled solvent costs due to Middle East geopolitical disruptions. Three major capex projects representing approximately ₹2,000 crores investment have completed validations, with commercial supply pending regulatory approvals from agencies like FDA.

The company is strategically building capabilities in peptides through complete backward integration, installing additional 3,000-liter reactors to meet growing demand. Management cautioned that Q1's exceptional 68% gross margin is unsustainable, expecting normalization to around 60% for the full year due to product mix variations and elevated raw material costs. New generic products including Brivaracetam and Ticagrelor are expected to commence commercial volumes within three to six months.