InvestorQ : Is it true that the API business helped Divi Labs to report such a good performance in the Sep-20 quarter?
swati Bakhda made post

Is it true that the API business helped Divi Labs to report such a good performance in the Sep-20 quarter?

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Sam Eswaran answered.
6 months ago
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India’s leading API Company is Hyderabad based Divi’s Labs which continued to positively surprise the street with a 21.01% increase in the Sep-20 quarter sales revenues at Rs.1749 crore. The revenue growth of Divi’s has been specifically strong as its focus is largely on the active pharma ingredients API segment, which is currently highly profitable.

Operating profits of Divi were up 53% at Rs.680 crore, which can be explained by the lower cost of materials used. This led to the OPM expanding from 30.76% to 38.87%. Divi also reported Profit after tax or PAT growth of 45.6% at Rs.520 crore despite a forex loss of Rs.15.60 crore. PAT margins expanded by over 500 bps to 29.7%

Clearly, Divi has made the most of the extremely strong growth in the active pharma ingredients or API business which Divi’s specializes in. API demand was strong as an alternative to China and even prices spurted as pharma companies stocked up on APIs.

There was also good progress on the cash generation story of Divi. The net cash generated from operations was up almost 3-fold on a yoy basis at Rs.1157 crore in the first half of the fiscal due to higher profitability and better working capital flows.

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