Divi's Laboratories, a Rs.3,800 crore pharma company from Hyderabad, has established strong presence in export markets and its exports contributed over 88 per cent to its consolidated net sales during 2015-16. It is exporting over 70 per cent of its products to regulated markets in Europe and USA. It operates predominantly in export markets and has broad product portfolio under generics and custom synthesis. The focus is on international market and assisted well for financial growth.
The company issued bonus shares in the ratio of 1:1 during 2015-16 and its equity capital increased to Rs.53.09 crore from 26.55 crore in the previous year. With sound financial position backed up by lower borrowings and hefty reserves & surplus position, the management declared equity dividend of 500 per cent on an enlarged equity capital. It has contributed Rs.324 crore to national exchequer in 2015-16. Currently, promoters are holding 52.08 per cent equity stake.
Focus on export markets, handsome dividend, bonus issue and sound financial condition helped Divi's scrip to move up on BSE. Currently, Divi's Rs.2 each share is moving in the range of Rs.1,175-1,200. The scrip touched to its highest level at Rs.1,242 during August 2015 and lowest at Rs.918.10 on February 29, 2016. The market capitalization worked out to Rs.31,598 crore.
The company's consolidated net sales for the year ended March 2016 increased by 21.2 per cent to Rs.3,776 crore from Rs.3,115 crore in the previous year. Its EBDITA increased by 23.8 per cent to Rs.1,498 crore from Rs.1,210 crore. The company is almost debt free and its interest cost is negligible at Rs.2.32 crore. Its net profit increased by 30.5 per cent to Rs.1,112 crore from Rs.852 crore and EPS after enhance equity capital worked out to Rs.41.88 as against Rs.32.08 in the previous year. The improved earnings is mainly due to focus on R&D skills, manufacturing excellence, cost reduction and operational ability.
The company's sales in North America were marginally higher by one percent to Rs.1,179 crore from Rs.1,167 crore in the previous year. Its sales in Europe went up sharply by 50 per cent to Rs.1,603 crore from Rs.1,069 crore. Its domestic sales increased by 10.3 per cent to Rs.449 crore from Rs.407 crore and contributed 12.1 per cent to its total sales during 2015-16. The Rest of the World sales declined by 28.1 per cent to Rs.81 crore. Its sales in other Asian region increased by 27.9 per cent to Rs.394 crore from Rs.308 crore.
As against the equity capital of Rs.53.09 crore, Divi's reserves & surplus improved to 22.1 per cent to Rs.4,235 crore from Rs.3,469 crore. Its long term borrowings amounts to only Rs.0.47 crore and short-term borrowings stood at Rs.41.42 crore. Thus the company has created sound financial base for future growth. Return on capital invested improved to 27.8 per cent from 25.5 per cent. Its book value worked out to Rs.163.87 as compared to Rs.134.18.
The company now has four multi-purpose manufacturing facilities in Andhra Pradesh and Telangana and three research centres at Hyderabad, Choutuppal and Vizag. The company's R&D expenditure increased 11.8 per cent to Rs.30.92 crore from Rs.27.66 crore. The company has triple certifications ISO-9001, ISO 14001 and OHSAS-18001 for its manufacturing facilities. It has a total 41 drug master files with US FDA and 199 DMFs and 20 CoS with various European Union authorities. It has filed a total of 31 patents for generic products.
The company has three subsidiaries with total investment of Rs.283 crore. Its US and Swiss subsidiaries are engaged in marketing distribution of nutraceutical products and these subsidiaries achieved aggregate turnover of Rs.189 crore as against Rs.168 crore in the previous year, a growth of 12 per cent. However, due to forex loss of Rs.4.82 crore for US subsidiary and Rs.4.75 crore for European subsidiary put pressure on their bottom line. The US subsidiary incurred a net loss of Rs.1.10 crore as against Rs.1.55 crore and European subsidiary's net profit declined to Rs.5.25 crore from Rs.6.02 crore. Divi's management expressed confidence that the subsidiaries will turn corner in short time.
Divi's has posted strong growth in top line as well as bottom line during the first quarter ended June 2016. Its net profit went up by 23.2 per cent to Rs.302 crore from Rs.245 crore and EBDITA moved up by 25.9 per cent to Rs.420 crore from Rs.336 crore. Its net sales by 24.7 per cent to Rs.1,006 crore from Rs.807 crore. EPS, after considering enhanced equity capital due to bonus issue, worked out to Rs.11.37 from Rs.9.24 in the last period. Thus, the investors may get good returns on investment in short term.
Highlights DiVi's