Thread by @ValueEducator

#DivisLaboratories Q3 FY22 concall highlights 💊💊

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1. Revenues for the quarter stood at ₹2510 Cr (46% growth YoY).

2. PBT for the quarter stood at ₹1034 Cr (61% growth YoY).

3. Exports contributed to 92% of revenues for the quarter. Europe and the US contributed to 79% of revenues .

4. Generics contributed to 40% and Custom Synthesis contributed to 60% of revenues for the quarter. Nutraceutical business contributed ₹166 Cr for the quarter.

5. They have capitalized ₹196 Cr of capex during the quarter and ₹762 Cr for 9 months. They expect another ₹100 Cr to be capitalized by the end of the financial year. Capex in the new SEZ accounted for ₹368 Cr.

6. There was a significant increase in the price of some of the raw materials. They were able to mitigate the cost pressure due to geographical diversification of procurement, existing long term contracts with key suppliers and backward integration in key products.

7. Capex programs for debottlenecking, backward integration and upgradation of utilities have helped keep costs under control.

8. The generic business is more stable and the custom synthesis business is more lumpy.

9. They have a current capacity of 1700 reactors. The occupancy for that is close to 80-85%. So they currently have about 300 reactors that can accommodate any further client requirements.

10. The need for new COVID drugs for the NeoCov variant is coming quickly. So the innovators will be looking at players who can accommodate them quickly and also be able to scale the product.

11. They have never had an issue with capacity because they always invest ahead of time. They have invested about ₹2500 Cr over the last 3 years and with what they have added it closer to ₹3000 Cr.

12. They don't build product specific buildings’ they prefer to build multi product plants. They prefer to keep 2 or 3 blocks ready to take on additional products when the need arises.
They are constantly looking for greener chemistry to find a way to increase margins.

13. They prefer to keep the generic vs custom synthesis business at 50% each. The generic portfolio, they get to decide what to produce and how much to produce whereas on the custom synthesis side, they have to produce what the customer demands.

14. They still have 200 acres of land at Unit 1 and 150 acres of land in Unit 2. So they can quickly install more blocks there if required.

15. The USFDA is cracking down on Chinese manufacturers which is making the big pharma players consider alternatives. They are looking at the US, Europe and India. Since manufacturing in the US and Europe costs 10x of India, it is a big opportunity for Indian API manufacturers.

16. They usually have contracts for about 5 years and they have the option to pass on increases in raw material prices for them.