Visit http://indiaer.blogspot.com/ for complete details Divi’s Labs (CMP: `726, TP: `890, Outperform)
• We expect revenue growth at 33% YoY to `3.02bn. We expect both CCS as well as generics business to show rebound. The carotenoid business is likely to have grown ~100% on small base.
• We expect EBITDA margin to be ~45% (236bps lower than that in the corresponding quarter of the previous year); on a QoQ basis the EBIDTA margin is likely to have expanded by ~700bps. In 1QFY11, higher contribution from the relatively low-margin generics (indicating the industry’s re-stocking) led margins to fall to ~38%. We expect EBITDA to increase >26% YoY to `1.36bn.
• We expect margins to have expanded sequentially on change in product mix towards a balanced contribution from CCS and generics.
• Net profit is likely to show growth at 31% YoY and ~33% sequentially due to a significant 76% decline in interest cost to `7.2mn from `30.2mn.
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