Divi's Labs Q3 results: PAT rises 64.5% to Rs 589 cr on strong API demand

India's Divi's Laboratories reported a better-than-expected quarterly profit on Monday, aided by strong performance of its business that focuses on customised production of chemical compounds used in drugs, sending its shares higher.

The company's consolidated net profit jumped 64.5 per cent to Rs 589 crore ($67.6 million) in the third quarter, slightly above analysts' estimates of Rs 513 crore, as per LSEG data.

The Hyderabad-based drugmaker's shares reversed course from a 0.2 per cent dip to trade 3.3 per cent higher after the results.

Divi's is one of India's largest manufacturers of active pharmaceutical ingredients (API), key components of a drug that produce the intended therapeutic effects. Its client list spans more than 100 countries and includes major drugmakers such as Novartis.

Its revenue from operations climbed 25 per cent to Rs 2,319 crore during the quarter, roughly in line with analysts' estimate of Rs 2,343 crore.

The company also provides contract development and manufacturing (CDMO) services. Divi's and its local peers stand to gain as major drugmakers are diversifying their supply chain to limit their reliance on China.

Divi's, in particular, has said it is also banking on demand from obesity drug manufacturers as they scramble to meet skyrocketing customer demand.

However, its generics business, much like those of its peers, is facing pricing pressure, a situation it hopes will stabilise this year.