Divi'S Laboratories is an attractive growth stock
31-05-2014 • About Divi'S Laboratories (
$DIVISLAB) • By InTwits
Pay attention to Divi'S Laboratories as a growth stock. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Divi'S Laboratories showed fast growth in the last financial year. The company's revenue surged on 18.0% in FY2014. In addition to revenue Divi'S Laboratories also keeps delivering EBITDA growth. It was 24.3% in FY2014
In the last 3 years the company showed fast revenue growth of 24.5% from FY2011 to FY2014 annually. EBITDA surged on 26.8% from FY2011 to FY2014 annually.
Divi'S Laboratories ($DIVISLAB) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 37,107 | 13,071 | 18,584 | 21,399 | 25,253 |
|---|
| Revenue growth, % | | -64.8% | 42.2% | 15.1% | 18.0% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 4,166 | 4,983 | 6,915 | 8,165 | 10,152 |
|---|
| EBITDA growth, % | | 19.6% | 38.8% | 18.1% | 24.3% |
|---|
| EBITDA margin, % | 11.2% | 38.1% | 37.2% | 38.2% | 40.2% |
|---|
| Net Income | 3,403 | 4,293 | 5,333 | 6,020 | 7,733 |
|---|
| Net Income margin, % | 9.17% | 32.8% | 28.7% | 28.1% | 30.6% |
|---|
| |
| CAPEX | 602 | 1,627 | 2,892 | 3,401 | 2,465 |
|---|
| CAPEX/Revenue, % | 1.62% | 12.4% | 15.6% | 15.9% | 9.76% |
|---|
| Debt | 328 | 230 | 528 | 331 | 184 |
|---|
| Cash | 134 | 145 | 173 | 120 | 151 |
|---|
| Net Debt/EBITDA | 0.0x | 0.0x | 0.1x | 0.0x | 0.0x |
|---|
| |
| ROIC, % | 24.9% | 25.6% | 30.6% | 30.4% | 32.3% |
|---|
| ROE, % | 24.7% | 25.9% | 27.1% | 26.0% | 28.3% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. The company's EBITDA margin increased on 2 pp from 38.2% to 40.2% in FY2014. If we look for the longer period Divi'S Laboratories showed EBITDA margin growth of 2.10 pp from 38.1% in FY2011 to 40.2% in FY2014.
Divi'S Laboratories shows attractive ROIC at 32.3% for the last 12 months which assumes stable development model. During the last three years it surged - it was 25.6% in FY2011. It's average ROIC for the last three years was 31.1%.
Divi'S Laboratories's Net Income margin increased on 2.50 pp from 28.1% to 30.6% in FY2014. In the last 3 years Net Income margin decreased on 2.20 pp from 32.8% in FY2011 to 30.6% in FY2014.
Divi'S Laboratories operates at ROE of 28.3%. It's average level of ROE for the last three years was 27.1%.
Capital expenditures (CAPEX)
To this fast growth the company had to invest in CAPEX.The company's CAPEX/Revenue was 9.76% in FY2014. The company's CAPEX/Revenue dropped on 2.69 pp from 12.4% in FY2011 to 9.76% in FY2014. It's average level of CAPEX/Revenue for the last three years was 13.7%.
Leverage (Debt)
The company has low debt level at 0.0x Net Debt/EBITDA - at the same time with high growth. In the last 3 years Divi'S Laboratories showed big decline in leverage of 0.01x from 0.02x in FY2011 to 0.00x in FY2014.
Management team
Murali Krishna Prasad Divi runs Divi'S Laboratories as a CEO.
Peers in Pharmaceuticals
Below we provide Divi'S Laboratories benchmarking against other companies in Pharmaceuticals industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Granules India ($GRANULES) | | -68.4% | 37.6% | 16.9% | 43.4% |
| Torrent Pharmaceuticals ($TORNTPHARM) | | -63.5% | 22.7% | 17.7% | 32.2% |
| Alembic Pharmaceuticals ($APLLTD) | | -52.0% | 22.0% | 3.7% | 22.6% |
| Glenmark Pharmaceuticals ($GLENMARK) | | -64.0% | 36.3% | 24.7% | 19.8% |
| Themis Medicare ($THEMISMED) | | 6.9% | -38.3% | 9.1% | 15.9% |
| |
|---|
| Median (15 companies) | | -36.8% | 18.0% | 16.9% | 12.6% |
|---|
| Divi'S Laboratories ($DIVISLAB) | | -64.8% | 42.2% | 15.1% | 18.0% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 51.7% | | | 52.1% | 57.4% |
| Omega Laboratories ($OMEGALAB) | | | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (2 companies) | 55.5% | | 46.9% | 26.1% | 28.7% |
|---|
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 3.0% | 21.7% | 25.8% | 22.9% | 25.1% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 7.2% | 18.3% | 20.2% | 22.8% | 23.7% |
| Alembic Pharmaceuticals ($APLLTD) | | 13.4% | 15.4% | 16.4% | 19.2% |
| Glenmark Pharmaceuticals ($GLENMARK) | 8.2% | 20.1% | 17.8% | 20.9% | 18.3% |
| Cadila Healthcare ($CADILAHC) | 23.5% | 22.8% | 21.6% | 17.5% | 16.7% |
| |
|---|
| Median (14 companies) | 7.7% | 16.9% | 13.5% | 12.8% | 15.1% |
|---|
| Divi'S Laboratories ($DIVISLAB) | 11.2% | 38.1% | 37.2% | 38.2% | 40.2% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Granules India ($GRANULES) | 0.9% | 5.3% | 8.8% | 15.2% | 24.3% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 2.6% | 12.5% | 6.6% | 9.6% | 9.9% |
| Unichem Laboratories ($UNICHEMLAB) | 3.2% | 11.0% | 12.9% | 9.1% | 9.2% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 4.5% | 15.9% | 9.3% | 6.5% | 8.2% |
| Cadila Healthcare ($CADILAHC) | 8.5% | 11.2% | 24.6% | 11.8% | 6.9% |
| |
|---|
| Median (11 companies) | 3.7% | 5.6% | 6.1% | 6.1% | 6.3% |
|---|
| Divi'S Laboratories ($DIVISLAB) | 1.6% | 12.4% | 15.6% | 15.9% | 9.8% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | | | 27.5% | 29.1% | 41.5% |
| Torrent Pharmaceuticals ($TORNTPHARM) | 26.5% | 22.3% | 26.4% | 30.5% | 33.2% |
| Dr.Reddy'S Laboratories ($DRREDDY) | 3.4% | 18.6% | 26.0% | 22.0% | 21.5% |
| Granules India ($GRANULES) | | 12.8% | 15.8% | 14.2% | 18.4% |
| Neuland Laboratories ($NEULANDLAB) | 5.3% | 10.4% | 12.3% | 15.3% | 18.2% |
| |
|---|
| Median (20 companies) | 13.5% | 12.8% | 14.2% | 14.8% | 15.6% |
|---|
| Divi'S Laboratories ($DIVISLAB) | 24.9% | 25.6% | 30.6% | 30.4% | 32.3% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Granules India ($GRANULES) | 2.3x | 2.0x | 2.2x | 2.4x | 2.7x |
| Neuland Laboratories ($NEULANDLAB) | 7.9x | 4.9x | 4.2x | 3.5x | 2.6x |
| Glenmark Pharmaceuticals ($GLENMARK) | 2.7x | 3.2x | 2.7x | 2.1x | 2.2x |
| Cadila Healthcare ($CADILAHC) | 1.0x | 0.8x | 1.7x | 2.2x | 1.8x |
| Morepen Laboratories ($MOREPENLAB) | 7.0x | 22.8x | 6.1x | 3.4x | 1.7x |
| |
|---|
| Median (16 companies) | 1.7x | 1.8x | 1.7x | 2.1x | 0.3x |
|---|
| Divi'S Laboratories ($DIVISLAB) | 0.0x | 0.0x | 0.1x | 0.0x | 0.0x |
