Divis Laboratories misses quarterly profit estimates as material costs and labor charges weigh on earnings
The Indian drug maker reported a lower quarterly profit today due to rising material expenses and a one-off labor charge. Revenue still beat expectations.
Insights:
Divi's Laboratories Limited reported a consolidated third-quarter net profit of 5.83 billion rupees for the period ended December 31, missing the average analyst estimate of 6.18 billion rupees. According to data tracked by LSEG, the profit shortfall occurred despite revenue from operations rising 12.2% to 26.04 billion rupees. The company, which is a major Indian contract drug manufacturer, cited higher input costs and a significant regulatory charge as the primary factors impacting its bottom line during the quarter.
Profitability was squeezed by a 19% rise in material costs, while total expenses increased by 9.7%. A specific factor contributing to the results was a one-time 740 million rupee charge recorded for compliance with the new labour laws in India 
IN. This discrete, non-recurring expense coincided with the broader rise in operational costs, leading to the reported shortfall in net profit compared to market expectations.
IN. This discrete, non-recurring expense coincided with the broader rise in operational costs, leading to the reported shortfall in net profit compared to market expectations.
