Contract drug maker Divi’s misses profit view on high material costs | Company News

Indian contract drugmaker Divi’s Laboratories reported third-quarter profit below estimates on Wednesday as higher raw material costs and one-time charges due to changes in India’s labor laws hurt profitability.

The Hyderabad-based company’s consolidated net profit fell marginally to ₹583 crore ($64.31 million) in the quarter ended December 31 from ₹589 crore in the previous year.

Analysts on average were expecting ₹618 crore, according to data compiled by LSEG.

Global pharmaceutical companies are increasingly turning to Indian contract drug manufacturers such as Divi’s, Sai Life Sciences and Piramal Pharma as part of plans to diversify the supply chain beyond China.

Demand from major pharmaceutical companies for customized production of chemical compounds remained strong in the quarter.

However, the cost of materials consumed increased by 19 percent, taking its total expenses by 9.7 percent to ₹ 1,838 crore.

Additionally, Divi Labs has assessed a one-time charge of ₹74 crore for complying with India’s new labor laws.

Revenue from operations rose 12.2 per cent to ₹2,604 crore, beating analysts’ average estimate of ₹2,596 crore.

(Only the headline and image of this report may have been re-worked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)