Divi's Labs slumps on poor Q1

Divi’s Labs is the second top loser on the BSE, going down over 5.5% to Rs.680.35. Its 52-week high is at Rs.1380 and low at Rs.533.10.

The company posted a very disappointing set of Q1FY18 numbers. On a 18% (YoY) drop in total income at Rs.854 crore, the company posted a 42% decrease in net profit at Rs.176 crore.

EBITDA was down 39% at Rs.245 crore while margins showed a sharp slip from 39.7% to 29.8%.

The company has blamed this poor performance on the import alert issued by US FDA on its Visakhapatnam facility in March 2017 and then a warning letter in May 2017. Obviously it had to rework on procedures and protocols on its exports from the unit and the company says that since then it has done all to comply to FDAs needs and it now awaits further action from FDA.

Divi’s is a sound pharma company. Its interest burden is very low and equity stands at Rs.53.09 crore. EPS for Q1 stands at Rs.6.65 (FV of Rs.2).