Divi’s Laboratories (DIVISLAB) Q4 08/09 earnings summary

Executive summary

• FY09 net sales rose 15% YoY to Rs.1,190.56 crore; reported PAT increased 20% to Rs.424.46 crore, with exports contributing 93% of turnover.

• Growth faced pressure from customer destocking, global slowdown and substantial foreign-exchange losses; a disputed SEZ tax calculation also affected reported tax provisioning.

Financial highlights

• Net sales Rs.1,190.56 crore vs Rs.1,033.19 crore; total income Rs.1,213.57 crore vs Rs.1,046.80 crore; PBDIT Rs.513.39 crore vs Rs.430.52 crore.

• PBT Rs.458.34 crore vs Rs.384.69 crore; reported PAT Rs.424.46 crore vs Rs.353.56 crore; basic EPS Rs.65.59 vs Rs.54.77.

• Consolidated net profit was Rs.416.64 crore vs Rs.347.60 crore; consolidated basic EPS Rs.64.38 vs Rs.53.84.

• Excluding fair-value stock compensation adjustment, pro forma net income was Rs.422.14 crore, with basic EPS Rs.65.23 and diluted EPS Rs.64.57; reported net income was Rs.424.46 crore.

Outlook and guidance

• Management expected customer destocking to end over the following couple of quarters, with normal business conditions thereafter.

• Nutra operations and phase II products were expected to support sales growth; subsidiary management targeted profitable operations through product launches, customer qualification and expanded distribution.

• Capacity additions and optimization were planned to address business opportunities in custom synthesis and generic APIs, while maintaining complementary work with innovators and a non-compete approach with generic customers.