The share price of Divis Laboratories ltd. fell by more than 5.5% due to the below par quarterly financial results posted by the company. Jolted by a USFDA alert for it’s Visakhapatnam facility,the pharma industry player registered a near 42% dip in the standalone net profit, as compared to the corresponding period for the previous quarter. The United States Food and Drug Administration had issued a warning letter for company’s Unit -II at Vishakhapatnam in April this year. On March 22, Divis Laboratories had said in a regulatory filing that the regulator had issued import alert for products made at Visakhapatnam unit citing violation of manufacturing norms and refusal of inspection.
The net profit stood at Rs. 176.54 crore, as opposed to Rs. 301.81 crores for the period April- June 2016. The turnover of the Hyderabad based company had seen a decline of nearly 5% and stood at Rs. 1,088 crores, as against Rs. 1,121 crores for the same period last fiscal. EBITDA for the quarter under review fell by 48.3% yoy to Rs. 277 crore EBITDA margin for the quarter stood at 33.7%. This margin contraction was driven by adverse movements in inventories. The company also registered a forex loss of Rs. 40 crore. In the previous year, it posted a forex gain of Rs. 37 crore, according to a release. “Revenue for the quarter has been impacted due to time required for setting up protocols and procedures for release of export shipments as stipulated in the Import Alert by USFDA,” Divi’s Labs said.
The poor return woes continue for the heatlhcare sector, with the Benchmark BSE Healthcare Index returning just 0.75% in the year so far. Divis labs year to date returns have been abysmally low at negative 8% . The share was trading at Rs. 689 in the afternoon.