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Divi's Labs Receives ₹570.51 Crore Income Tax Draft Order for FY2022-23
Divi's Laboratories has received a Draft Assessment Order for FY2022-23 (AY 2023-24) from the Income Tax Authority. The order proposes additions and disallowances totaling ₹570.51 crores to the company's returned income. These adjustments are primarily attributed to Transfer Pricing on specified domestic transactions and other corporate tax matters. The company intends to contest the order and file an appeal with the appropriate authorities.
Key Highlights
Draft Order issued under Section 144C(1) of the Income Tax Act for FY2022-23.
Proposed additions and disallowances amount to ₹570.51 crores.
Adjustments involve Transfer Pricing on domestic transactions and corporate tax adjustments.
Penalty proceedings under Section 270A for alleged under-reporting of income to be initiated separately.
Company is evaluating the order and plans to file an appeal within the stipulated time.
💼 Action for Investors
Investors should monitor the litigation progress as the proposed amount is significant, though it is currently a draft order and will likely be contested in higher tax forums. No immediate financial impact is expected until the final order is passed and appeals are exhausted.
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Divi's Labs Q3FY26: Total Income Up 12% to ₹2,692 Cr; PAT Stable at ₹583 Cr Post-Exceptional Item
Divi's Laboratories reported a 12% year-on-year increase in total income to ₹2,692 crores for Q3FY26, driven by strong performance in Custom Synthesis and Nutraceuticals. While Profit Before Tax (pre-exceptional) grew to ₹854 crores, the bottom line was impacted by a one-time ₹74 crore exceptional charge related to new government labor codes. The company continues to shift its mix toward Custom Synthesis, which now accounts for 57% of revenue. Management confirmed that GLP-1 pilot and commercial blocks are completed and currently undergoing validation.
Key Highlights
Total income for Q3FY26 rose to ₹2,692 crores from ₹2,401 crores in the previous year.
Custom Synthesis segment contributed 57% of revenue, while Generics accounted for 43%.
Material consumption costs improved to 36.3% of sales, down from 39.8% in Q3FY25.
Exceptional item of ₹74 crores recognized due to revised employee benefit obligations under new labor codes.
Capital work in progress (CWIP) remains high at ₹2,394 crores, focusing on GLP-1 capacity and Unit 3 expansions.
💼 Action for Investors
Investors should focus on the improving gross margins and the progress in the high-growth GLP-1/Peptide segment which is nearing commercialization. The one-time exceptional hit is non-recurring, and the underlying operational strength remains robust with a successful US FDA inspection at Unit 1.
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Divi's Labs Q3 FY26 Consolidated Revenue up 12% YoY to ₹2,604 Cr; PAT Flat at ₹583 Cr
Divi's Laboratories reported a 12.3% YoY growth in consolidated revenue at ₹2,604 crore for Q3 FY26. However, consolidated net profit remained nearly flat at ₹583 crore, compared to ₹589 crore in the previous year, primarily due to a one-time exceptional charge of ₹74 crore related to new Labour Codes. On a sequential basis, revenue and PAT declined by 4.1% and 15.4% respectively. Despite the flat PAT, the 9-month consolidated profit shows a healthy 18.8% growth YoY reaching ₹1,817 crore.
Key Highlights
Consolidated Revenue from operations grew 12.3% YoY to ₹2,604 crore.
Consolidated Net Profit stood at ₹583 crore, down 1% YoY, impacted by a ₹74 crore exceptional item.
Profit Before Tax (before exceptional items) increased 17.6% YoY to ₹854 crore.
Nine-month (9M FY26) consolidated PAT grew 18.8% YoY to ₹1,817 crore.
Forex gain for the quarter was significantly lower at ₹18 crore compared to ₹64 crore in the previous quarter.
💼 Action for Investors
Investors should look past the one-time exceptional labour code impact and focus on the steady 12% top-line growth. While sequential performance was soft, the 9-month growth trajectory remains positive for long-term holders.