Divi's Laboratories delivers 64% profit growth in Q2

DIVISLAB Divi's Laboratories Limited (DIVISLAB) reported a 63.6% year on year increase in consolidated net profit to ₹1,127 crore in Q2 FY27. Revenue from operations grew 35.4% to ₹3,676 crore. The most interesting part of these results is the improvement in operating profitability. EBITDA increased 76.4% to ₹1,566 crore. EBITDA margin expanded to 42.6%, compared with 32.7% in the corresponding quarter last year. This is a much faster increase in operating profit than revenue. There is another detail that strengthens the result. Other income declined to ₹94 crore from ₹145 crore. The company also reported a lower foreign exchange gain of ₹24 crore compared with ₹63 crore a year ago. So the profit growth was not driven by higher other income or foreign exchange gains. The improvement came primarily from the operating business. However, I would not assume that a 42.6% EBITDA margin will automatically continue. The next few quarters will show whether this margin expansion is sustainable or partly reflects favourable product mix, pricing and operating conditions during this quarter. The first half numbers are also encouraging. Consolidated revenue reached ₹6,756 crore and net profit stood at ₹2,029 crore. My view is that this is a strong quality of earnings result. Revenue growth is healthy, but the bigger positive is that operating profit is growing much faster than sales. I would now watch whether Divi's can maintain margins above 40% while sustaining revenue growth in the coming quarters. My stance: Positive on the latest operating performance. I would remain constructive as long as margin expansion is supported by sustainable business growth rather than a temporary improvement in product mix.