Divi’s Labs Q4 FY25: Growth, Capex & CDMO Push

Divi’s Laboratories Limited, one of India’s foremost pharmaceutical manufacturing and custom synthesis companies, posted a strong performance in Q4 FY25, overcoming multiple macroeconomic headwinds. With 23% year-on-year growth in net profit and 12.2% growth in revenue, Divi’s continues to reinforce its market leadership through diversified growth strategies, process innovation, and global partnerships — especially in the custom synthesis and peptide manufacturing segments.

This article dissects Divi’s financial performance, key business segments, supply chain strategies, and capex outlook while examining how its forward-looking projects, such as the Kakinada plant and contrast media foray, position the company for the next wave of expansion.

📊 Q4 FY25 and FY25 Financial Highlights

Key Takeaways:

• Strong 37% YoY increase in net profit for FY25 reflects operational efficiency and favorable product mix.

• Revenue grew 19.3% YoY, powered by strong export contributions and custom synthesis demand.

• Forex gains (~₹48 Cr in FY25 vs. ₹30 Cr in FY24) helped support bottom-line growth.

🚢 Navigating Global Supply Chain Challenges

Despite facing Red Sea shipping disruptions, rising global transit times, and input cost pressures, Divi’s responded with strategic agility:

Key Supply Chain Strategies:

• Multi-pronged procurement across the US, EU, Middle East, and Asia

• Strengthened inbound logistics and safety stock levels

• Contingency models with alternate suppliers

• Close monitoring of air and sea freight cost trends

These measures mitigated the impact of increased lead times (~2–3 weeks longer due to vessel re-routing), preserving production continuity and customer commitments.

🏭 Kakinada Unit III – Capex, Commercialization & Strategic Impact

The Unit III facility near Kakinada, a critical part of Divi’s backward integration and scale-up roadmap, saw robust capital activity:

• ₹515 Cr capitalized in Q4 FY25, including ₹337 Cr for Kakinada

• Total capex till March 2025: ₹1,497 Cr

• Ongoing capex progress: ₹1,022 Cr, of which ₹562 Cr is Kakinada-specific

• Phased commercialization underway, supporting margin expansion and raw material security

• Additional 300 acres of land at Kakinada available for future expansion in 1–2 phases

This facility is instrumental in improving gross margins, securing raw materials, and enabling long-term cost control through vertical integration.

🔬 Business Segment Performance and Strategic Highlights

🔸 Generics Portfolio: Stability Amidst Pricing Pressures

• Persistent pricing pressure due to heightened global competition

• Despite margin pressure, volume stability maintained across key products

• Focused on operational excellence, cost discipline, and process innovation

• FY25 product mix: Generics 46%, Custom Synthesis 54%

🔸 Custom Synthesis / CDMO: Growth Engine

Divi’s saw strong and sustained momentum in the custom synthesis (CDMO) business:

• High engagement levels with clients

• New long-term global agreement for advanced intermediates — revenue visibility expected from Q3 or Q4 FY26

• Increasing RFQs (Request for Quotations) following the Bio-Secure Act, with strong pre-existing pipeline

• Export share of 88% of total revenue, with Europe and US making up 73% (vs 70% in FY24)

🔸 Peptide & Amino Acid Business: Rising Star

• Increased focus on GLP-I, GIP, and GLP-II analogs

• Investment in solid-phase and liquid-phase synthesis technologies

• Manufacturing specialized protected amino acids and peptide fragments for innovators

• Positioned to serve novel biologic and biosimilar development

🔸 Contrast Media: Emerging Opportunity

• Development of contrast media segment underway

• Continuous investment in R&D and production capabilities

• Strategy aimed at positioning Divi’s as a future leader in high-growth radiology/pharma interface markets

💰 Balance Sheet Strength

As on 31st March 2025 (Standalone Basis):

These numbers underscore Divi’s robust liquidity and working capital management, providing strategic flexibility for future investments and contingencies.

🧮 Margins and Operational Metrics

• Material Consumption as % of Revenue: ~40% (Q4 and FY25)

• Forex Gain: ₹10 Cr in Q4 FY25 (vs. ₹2 Cr loss in Q4 FY24)

• Constant Currency Growth: ~18% for FY25 (vs. -2% in FY24)

• Capital Work in Progress: ₹1,022 Cr (including Kakinada)

📈 Capex Outlook and Strategic Investments

• FY26 planned capex (including maintenance): ~₹1,400 Cr

• Focus on:

  • Next-generation technologies for sustainable small molecule production

  • Expansion of peptide capabilities

  • Enhancement of backward integration infrastructure

  • Capacity building in contrast media and CDMO verticals

📊 Segment Revenue Highlights (FY25)

Note: Nutraceutical revenue for Q4 FY25 was ₹205 Cr

🔮 Future Outlook: Strategic Guidance & Market Confidence

📌 Management Commentary:

• Guidance for double-digit revenue growth going forward

• Growth to be led by:

  • Custom synthesis contracts

  • Expansion in peptide and contrast media segments

  • Capacity additions from Kakinada plant

• Continued focus on capability development, technological innovation, and customer partnership models

🌐 Global Outlook:

• FY26 expected to witness stabilization in air freight and sea logistics

• Divi’s expects to leverage its diversified global sourcing model to contain cost volatility

🔚 Conclusion: Resilience, Expansion, and Execution Define Divi’s FY25

Divi’s Laboratories has delivered an impressive performance for FY25, overcoming global headwinds while strengthening its strategic pillars across CDMO, peptides, generics, and nutraceuticals. The company’s well-capitalized balance sheet, robust logistics management, and proactive capex planning indicate a clear roadmap for scalable and sustainable growth.

With 88% export-driven revenue, deep partnerships in the pharma value chain, and differentiated manufacturing capabilities, Divi’s is positioning itself not just as a generic pharma leader, but also as a next-generation CDMO powerhouse.

Investors and analysts can look forward to further updates in the second half of FY26 when the long-term synthesis agreement kicks in, while in the short term, margin improvement and capex execution will remain key metrics to watch.

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