Key highlights from Divi’s Laboratories Ltd (DIVISLAB) Q1 FY23 Earnings Concall
Q&A Highlights:
- Tushar Manudhane from Motilal Oswal asked about the stable sales in the generic side for the past 3 quarters, if capacity expansion will increase sales in coming quarters. Murali Divi MD said that with the expansion, the company will see increased sales in the generic portfolio.
- Surya Patra of PhillipCapital asked about margins, if there is sequentially any change in cost structure. Murali Divi MD replied that in productivity and efficiency there is no change, but raw material cost have gone up by 30% to 50% and the energy cost have also gone up with impacted margins.
- Shyam Srinivasan from Goldman Sachs asked about any product or customer concentration risk, with top products and customer going higher. Murali Divi MD replied that going forward it will be more diversified and will go back to where it was.
- Shyam Srinivasan from Goldman Sachs asked about imports and how much of it the company is dependent from a material consumption perspective. Nilima Divi Director replied that the dependency on China is not totally gone, because they have the largest capacities in basic chemicals in the industry. The company believes costs will come down and situation will normalize.
- Cyndrella Carvalho from JM Financial asked if the generic run rate of about 870 should be improving from 2Q23 to rest of year. Murali Divi MD answered that the company doesn’t want to speak on QonQ basis. In the next two years, the company will be able to see the upside and value addition.
- Cyndrella Carvalho from JM Financial enquired if there is any one-offs in the other expenses that elevated it in 1Q23. Murali Divi MD clarified that there is no one-off in 1Q, other than what the fast track projects have contributed in the last year.
- Cyndrella Carvalho from JM Financial also asked if it can be expected to have 40% EBITDA margin sustainable for FY23. Murali Divi MD answered that the company should be able to maintain the 40% EBITDA margin or better in FY23.