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Divi'S Laboratories is an attractive stock for a growth investor

04-06-2016 • About Divi'S Laboratories ($DIVISLAB) • By InTwits

Divi'S Laboratories is a fast-growing stock in Pharmaceuticals industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Divi'S Laboratories showed fast growth in the last financial year. The company's revenue surged on 21.2% in FY2016. EBITDA also increased considerably: 21.3% for the same period.

In the longer period the company showed fast revenue growth of 20.8% from FY2013 to FY2016 annually. EBITDA surged on 20.1% from FY2013 to FY2016 annually.

Divi'S Laboratories ($DIVISLAB) financials for the last 5 years

mln. INR FY2012 FY2013 FY2014 FY2015 FY2016
Revenue18,58421,39925,25331,14937,764
Revenue growth, %15.1%18.0%23.3%21.2%
SG&A, %0.130%
EBITDA6,9158,16510,15211,65814,144
EBITDA growth, %18.1%24.3%14.8%21.3%
EBITDA margin, %37.2%38.2%40.2%37.4%37.5%
Net Income5,3336,0207,7338,51511,119
Net Income margin, % 28.7%28.1%30.6%27.3%29.4%
 
CAPEX2,8923,4012,4653,0723,957
CAPEX/Revenue, %15.6%15.9%9.76%9.86%10.5%
Debt528331184266425
Cash173120151646687
Net Debt/EBITDA0.1x0.0x0.0x-0.0x-0.0x
 
ROIC, %30.6%30.4%32.3%30.5%31.9%
ROE, %27.1%26.0%28.3%26.4%28.6%

Profitability and return on investment


EBITDA growth was supported by margin expansion. Divi'S Laboratories showed almost no change in EBITDA margin of 0.100 pp from 37.4% to 37.5% in FY2016. In the longer period Divi'S Laboratories showed small EBITDA margin decline of 0.700 pp from 38.2% in FY2013 to 37.5% in FY2016.

Divi'S Laboratories shows attractive ROIC at 31.9% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 30.4%. For the last three years the average ROIC was 31.6%.

The company's Net Income margin increased on 2.10 pp from 27.3% to 29.4% in FY2016. In the longer period the company showed small growth in Net Income margin of 1.30 pp from 28.1% in FY2013 to 29.4% in FY2016.

Divi'S Laboratories operates at ROE of 28.6%. For the last three years the average ROE was 27.7%.

Capital expenditures (CAPEX)


To fuel this fast growth Divi'S Laboratories had to invest in CAPEX.Divi'S Laboratories's CAPEX/Revenue was 10.5% in FY2016. The company's CAPEX/Revenue dropped on 5.41 pp from 15.9% in FY2013 to 10.5% in FY2016. Average CAPEX/Revenue for the last three years was 10.0%.

Leverage (Debt)


Divi'S Laboratories has negative net debt at -0.0x Net Debt/EBITDA - at the same time with high growth. In the longer period the company's leverage dropped on 0.04x from 0.03x in FY2013 to -0.02x in FY2016.

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, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Mangalam Drugs & Organics ($MANGALAM)-18.2%-2.1%79.8%33.7%
Sun Pharmaceutical Industries ($SUNPHARMA)39.9%40.4%42.4%70.2%
Lyka Labs ($LYKALABS)41.9%-25.7%-22.6%68.7%
Marksans Pharma ($MARKSANS)16.7%23.3%43.3%26.8%
Torrent Cables ($TORRCABS)27.5%17.4%-42.9%26.5%
 
Median (41 companies)19.8%14.7%12.6%8.6%11.4%
Divi'S Laboratories ($DIVISLAB)15.1%18.0%23.3%21.2%


Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top
Dr.Reddy'S Laboratories ($DRREDDY)52.1%57.4%57.6%59.6%
Omega Laboratories ($OMEGALAB)0.0%0.0%0.0%0.0%0.0%
 
Median (2 companies)46.9%26.1%28.7%28.8%29.8%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Hester Biosciences ($HESTERBIO)32.9%
Sun Pharmaceutical Industries ($SUNPHARMA)40.8%44.3%44.9%29.2%
Natco Pharma ($NATCOPHARM)21.5%23.2%24.9%26.2%24.1%
Dr.Reddy'S Laboratories ($DRREDDY)25.8%22.9%25.1%23.2%25.8%
Marksans Pharma ($MARKSANS)-27.2%15.0%18.1%23.2%
 
Median (53 companies)12.7%12.8%14.3%12.0%18.0%
Divi'S Laboratories ($DIVISLAB)37.2%38.2%40.2%37.4%37.5%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Claris Lifesciences ($CLARIS)58.1%42.9%103.1%15.8%
Wintac ($WINTAC)22.8%
Hester Biosciences ($HESTERBIO)21.5%
Ipca Laboratories ($IPCALAB)11.2%8.3%11.6%17.8%
Natco Pharma ($NATCOPHARM)24.4%16.3%14.4%14.1%13.8%
 
Median (31 companies)7.7%7.5%5.7%6.0%8.1%
Divi'S Laboratories ($DIVISLAB)15.6%15.9%9.8%9.9%10.5%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Marksans Pharma ($MARKSANS)-142.4%34.9%33.8%41.2%
Alembic Pharmaceuticals ($APLLTD)27.5%29.1%41.5%35.7%62.1%
Jenburkt Pharmaceuticals ($JENBURPH)34.1%29.0%32.4%35.3%
Abbott India ($ABBOTINDIA)29.6%26.9%30.5%34.2%34.1%
Ngl Fine-Chem ($NGLFINE)9.3%17.9%22.4%27.5%
 
Median (63 companies)13.7%13.2%14.4%13.0%13.1%
Divi'S Laboratories ($DIVISLAB)30.6%30.4%32.3%30.5%31.9%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Jubilant Life Sciences Limited ($JUBILANT)4.0x3.5x3.5x6.4x3.2x
Shasun Pharmaceuticals ($SHASUNPHAR)2.8x4.5x6.0x6.2x
Claris Lifesciences ($CLARIS)1.9x1.1x1.8x3.2x2.9x
Dishman Pharmaceuticals & Chemicals ($DISHMAN)3.6x2.6x2.3x2.9x2.1x
Neuland Laboratories ($NEULANDLAB)4.2x3.5x2.6x2.6x2.0x
 
Median (48 companies)1.6x1.4x0.5x0.2x0.4x
Divi'S Laboratories ($DIVISLAB)0.1x0.0x0.0x-0.0x-0.0x


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