Divi’s Laboratories Begins FY27 on a Strong Note as Custom Synthesis and Peptide Business Power Growth
Divi’s Laboratories kicked off FY27 with one of its strongest quarterly performances in recent years, reporting significant revenue and profit growth while outlining an ambitious roadmap for its high-value Custom Synthesis and peptide businesses.
During the Q1 FY27 earnings conference call, management highlighted that the company is benefiting from increasing demand from innovator pharmaceutical companies, ongoing capacity expansion, and a highly integrated manufacturing model that continues to provide supply chain resilience despite global uncertainties.
The management also reaffirmed its confidence in delivering double-digit revenue growth for FY27.
Q1 FY27 Financial Performance
| Particulars | Q1 FY27 | Q1 FY26 | Growth |
|---|---|---|---|
| Consolidated Revenue | ₹3,144 Cr | ₹2,529 Cr | +24% |
| Profit Before Tax | ₹1,180 Cr | ₹733 Cr | +61% |
| Profit After Tax | ₹902 Cr | ₹545 Cr | +66% |
| Standalone Revenue | ₹3,037 Cr | ₹2,476 Cr | +23% |
| Standalone PAT | ₹891 Cr | ₹557 Cr | +60% |
Additional highlights:
- Export contribution remained around 90% of standalone revenue.
- Europe and North America contributed nearly 75% of exports.
- Custom Synthesis accounted for 60% of revenue.
- Generic APIs contributed 40%.
Custom Synthesis Continues to Lead Growth
The biggest contributor to the quarter’s performance was the company’s Custom Synthesis (CDMO) business.
Management said customer projects continue across:
- Clinical development
- Validation batches
- Commercial supply preparation
- Multiple therapeutic areas
Three major capital expenditure projects are now nearing completion, with validation work already underway.
However, management clarified that meaningful commercial revenues from these projects will depend on regulatory approvals and customer qualifications, making the timing difficult to predict.
Despite this, the company expects healthy long-term growth from these investments.
Peptide Business Emerging as a Major Long-Term Opportunity
One of the most discussed themes during the earnings call was Divi’s expanding peptide platform.
The company described peptides as one of its biggest strategic investments.
Current initiatives include:
- Expansion of solid-phase peptide synthesis (SPPS)
- Growth in liquid-phase peptide synthesis
- Manufacturing peptide fragments
- Backward integration into peptide raw materials
- Strengthening analytical and process development capabilities
Management stated that Divi’s has developed an integrated manufacturing ecosystem covering:
- Basic raw materials
- Protected amino acids
- Peptide building blocks
- Dipeptides
- Tripeptides
- Peptide fragments
This integrated model is expected to improve supply reliability and competitiveness for global pharmaceutical customers.
The company also revealed it is adding multiple new 3,000-litre SPPS reactors as demand continues to grow.
Three Large Projects Progressing Through Validation
Management confirmed that its three major capex projects are currently moving through validation.
Once customer approvals and regulatory clearances are completed, commercial production can begin.
However, the company emphasized that confidentiality agreements prevent it from disclosing:
- Product names
- Customer names
- Commercial quantities
- Order book values
Instead, management reiterated that several additional projects are progressing through different stages of development alongside these flagship investments.
Generic Business Remains Stable
The Generic API business delivered stable volumes despite continued pricing pressure.
Management noted that:
- Pricing remains competitive globally.
- Higher raw material costs, particularly solvents, have resulted in selective price increases.
- Backward integration continues to protect margins and improve manufacturing efficiency.
The company has also filed several new Drug Master Files (DMFs), including products such as:
- Brivaracetam
- Ticagrelor
Commercial supplies for these products are expected over the next three to six months after customer qualification.
Unit 3 Becoming an Important Manufacturing Hub
Divi’s continues expanding its manufacturing network.
Management said Unit 3 is playing an increasingly important role by handling backward-integrated chemistry and intermediate manufacturing.
This allows:
- Better utilization of existing plants
- Improved supply assurance
- Greater manufacturing flexibility
- Capacity expansion without disrupting current production
Over time, Unit 3 is also expected to receive regulatory approvals for commercial manufacturing.
Current utilization across manufacturing facilities stands at approximately 80–85%.
Supply Chain Challenges Continue
Despite the strong quarter, management acknowledged ongoing global supply chain disruptions.
Challenges include:
- Elevated solvent prices
- Higher freight costs
- Port congestion
- Limited container availability
- Geopolitical uncertainty in West Asia
To reduce operational risk, Divi’s has adopted a strategy of maintaining approximately three months of inventory, ensuring uninterrupted production and customer deliveries.
Management believes this proactive inventory approach has successfully prevented production disruptions.
Nutraceutical Business Marks 20-Year Milestone
Divi’s also celebrated 20 years in the nutraceutical business.
What began with only two products has now expanded to:
- More than 100 products
- Human health solutions
- Animal health products
- Dietary supplements
Quarterly nutraceutical revenue increased to ₹298 crore, compared with ₹250 crore a year ago.
Strong Balance Sheet Supports Expansion
The company continues investing aggressively while maintaining a healthy financial position.
Key balance sheet highlights include:
| Particulars | Q1 FY27 |
|---|---|
| Cash & Cash Equivalents | ₹3,611 Cr |
| Trade Receivables | ₹3,056 Cr |
| Inventory | ₹4,413 Cr |
| Capital Work in Progress | ₹2,034 Cr |
| Assets Capitalized During Quarter | ₹451 Cr |
Management indicated that ongoing capital expenditure remains focused on supporting future commercial opportunities.
Contrast Media Business Making Progress
The company also shared updates on its contrast media business.
Iodine-based Contrast Media
- Commercial supplies have already begun for one customer.
- Long-term contracts with two customers are under discussion.
- Management expects substantial future volumes.
Gadolinium Products
The Gadolinium program remains in clinical qualification stages, with commercialization dependent on customer regulatory progress.
FY27 Outlook
While acknowledging uncertainty surrounding geopolitical developments and raw material costs, management remained optimistic about FY27.
Key expectations include:
- Double-digit revenue growth for FY27.
- Continued expansion in Custom Synthesis.
- Strong long-term opportunity in peptides.
- Commercialization of large validation projects after regulatory approvals.
- Ongoing investments in manufacturing capacity and technology.
Management also cautioned investors not to extrapolate quarterly margins, noting that the business typically experiences quarterly fluctuations depending on product mix, validation batches, and project timing.