Divi's Laboratories announces capacity addition worth ₹650-700 crore, to be funded through internal accruals

Divi's Laboratories on Thursday announced it is planning for capacity addition at its manufacturing facility with an estimated investment between ₹650 and ₹700 crore.

The capacity expansion will be funded from its internal accruals, the company said. The proposed facility is expected to be operational in January 2027. Shares of the company closed 0.64% higher on Thursday. Divi’s, however, has not provided any additional details pertaining to the capacity expansion plan.

During the third quarter of fiscal year 2024, the company’s total income rose over 7% year-on-year (YoY) to ₹1,950 crore. Net profit rose 17% YoY to ₹306 crore. The company pointed out that material consumption for the quarter came in at about 39% of sales revenue.

For the 9-month period ended December 31, 2023, the company earned a net profit of ₹1,062 crore on a total income of ₹5,804 crores.

Kiran S. Divi, chief executive officer said during the third quarter earnings call that the firm had witnessed a steady quarter driven by expanding market opportunities, a slight decline in raw material prices, subdued by persisting pricing pressure across the generic markets.

“Our forward momentum continues with unit 3 infrastructural establishments. The production activity in the 200 acres phase I greenfield project will commence in Q2 of FY25,” Divi said.

He also pointed out that the company is seeing a huge amount of growth and opportunities. “If you look at Kakinada in general, we have about 500 acres right now. Out of that, we are utilising 200 acres and also I have explained we still have 300 acres available in Kakinada as a greenfield for future development,” he had said while adding that more investments will be coming in as the company sees more opportunities.

Shares of the company have lost nearly 2% since the beginning of the year. The stock has gained over 19% in the last one year.