Divi’s Laboratories (DIVISLAB) Q4 07/08 earnings summary

Executive summary

• FY08 net sales rose 43% YoY to Rs.1,033.19 crore; PAT increased 84% to Rs.353.56 crore, supported by growth in custom synthesis and generic products.

• Exports accounted for 94% of turnover, with Europe and America representing 82% of business; recommended dividend was Rs.4 per Rs.2 share, or 200%.

Financial highlights

• Total income rose 42% to Rs.1,046.80 crore; PBDIT increased 66% to Rs.430.52 crore and PBT grew 70% to Rs.384.69 crore.

• PAT was Rs.353.56 crore versus Rs.191.74 crore; basic EPS was Rs.54.77 versus Rs.29.91, and diluted EPS was Rs.54.14 versus Rs.29.55.

• Operating expenses included Rs.8.60 crore of ESOP compensation, down from Rs.24.11 crore; fair-value pro forma net income was Rs.350.50 crore and basic EPS Rs.54.29.

• Consolidated net profit after tax was Rs.347.60 crore versus Rs.185.86 crore; consolidated basic and diluted EPS were Rs.53.84 and Rs.53.23.

Outlook and guidance

• Nutraceutical facility at the Pharma SEZ began commercial operations on 1 June 2008; beadlet products were being marketed through subsidiaries and directly.

• Capacity optimization and further additions were planned to meet business opportunities; strategy emphasized complementary work with innovators and a non-compete model with generic customers.

• Subsidiary management expected expanded nutraceutical supply and marketing to support profitable operations, while continued parent funding remained necessary during the ramp-up.