Q2 FY27 results analysis · November 07, 2026
Divis Laboratories Q2 FY27 Results Analysis: PAT Jumps 64%, Inventory Build Flatters Margins (DIVISLAB)
+63.6%PAT year on year, Rs. 1,127.00 Cr
Source: Quarterly results filing (NSE)
Quick summary
Divis Laboratories Ltd's Q2 FY27 numbers came in strong, with revenue of Rs. 3,676.00 Cr (+35.40% YoY) and PAT growth of +63.57% YoY. Here's a quick read of what worked, what to watch, and what management said.
Quick Details
| Results date | November 07, 2026 |
|---|---|
| Revenue (Q2) | Rs. 3,676.00 Cr (+35.40% YoY) |
| PAT (Q2) | Rs. 1,127.00 Cr (+63.57% YoY) |
| EBITDA margin | 42.60% (+990 bps YoY) |
| EPS (Q2) | Rs. 42.49 (+63.61% YoY) |
Quarter Snapshot
Revenue grew 35.40% YoY to Rs.3,676 crore with PAT up 63.57% to Rs.1,127 crore and reported EBITDA margin up ~990 bps YoY, keeping the double-digit FY27 revenue guidance on track. However, a Rs.631 crore inventory-build credit flatters reported margins — inventory-normalized margin of 25.44% is below last year's 37.72% — and cash conversion is weak (CFO/PAT 0.19x, FCF −Rs.488 crore) on a Rs.1,585 crore working-capital build. Backward integration and debt-free execution remain advantages, but earnings quality hinges on whether the inventory build reverses.
Q2 FY27 Expectations vs Results
| Driver | Expected before results | What happened | Verdict |
|---|---|---|---|
| Revenue | "Revenue / demand — likely ahead. The sector's demand gauge accelerated through the quarter" | Revenue +35.40% YoY, +19.35% QoQ (Rs.3,676 crore) | Played out |
| Margins | "Q2 is more likely flat-to-compressing sequentially off Q1's flattered level than expanding" | Reported EBITDA margin expanded to 42.60% from 40.75%; inventory-normalized margin also expanded (25.44% vs 23.96%) — but Q2 carried another Rs.631 crore inventory-build credit — expansion on both bases; quality caveat… | Contradicted |
| Forex | "a swing back from Q1's Rs.7 Cr forex loss toward the gain line seen in Q2 FY26" | Forex gain of Rs.24 crore (vs −Rs.7 crore Q1; +Rs.63 crore Q2 FY26) | Played out |
| Watch item: inventory swing reversal | "whether the ~Rs.500 Cr inventory swing reverses or persists" | Build persisted and grew: Rs.631 crore Q2 credit; inventories Rs.5,540 crore (+40.11% vs Mar-26) — persisted | Contradicted |
| Watch item: cash conversion | "working-capital deterioration, weak cash conversion and margin compression as the top headwinds" | CFO/PAT 0.19x; CFO/EBITDA 0.14x; FCF −Rs.488 crore | Materializing |
| Input costs | "Q2-to-date chemical prices were 'sharply lower than Q1FY27 levels'... the input line is not uniformly benign" | Material consumption 49.29% of revenue, flat vs Q1's 48.80%, sharply up YoY on the sign flip; filing does not quantify solvents — proxy flat QoQ | Partially |
| US tariff scope | "No retrieved measure inside the window directly taxes API/generic exports" | Filing is silent on tariffs — consistent | Not observable |
Read our full results preview.
Management Guidance vs Delivery
| What management said | Where | What happened | Verdict |
|---|---|---|---|
| FY27 revenue: double-digit growth | Q1 FY27 earnings call (Aug 1, 2026): "we are looking at double-digit growth"; first set at the Q4 FY26 call | H1 revenue +31.82% YoY; H2 needs only −10.58% YoY to clear the +10% FY floor (Rs.11,616 crore) | On Track |
| FY27 EBITDA margin "similar as last year" | Q1 FY27 earnings call (Nilima Prasad Divi): "it would be the similar as last year" | H1 P&L-derived EBITDA margin 41.86% vs FY26 31.88% — running ahead; caveat: reported margin carries Rs.1,148 crore of H1 inventory-build credits, and management's exact metric definition was never stated | On Track |
| FY27 gross margin ~60% | Q1 FY27 call: "gross margins were approximately 60% for the full year" | H1 consumption basis 50.93% (materials 49.07% of revenue); net-of-inventory basis 67.92% — management's exact basis is unstated (the Q1 notes figure reproduces the net basis) | Too Early |
| FY27 capex "constant" vs FY26 | Q1 FY27 call: "it would be a constant capex" | H1 payments for PP&E Rs.872 crore vs Rs.1,544 crore in H1 FY26; annualized ~Rs.1,744 crore vs FY26 Rs.2,520 crore | On Track |
| Three dedicated CS projects: commercial volumes Q3/Q4 CY2027 | Q3 FY26 call | Not addressed in the filing | Too Early |
| Brivaracetam/Ticagrelor commercial volumes 3–6 months from Aug 2026 | Q1 FY27 call | Not addressed in the filing | Too Early |
Key Investment Insights
Key Positives
- Revenue grew 35.40% YoY and 19.35% QoQ to Rs.3,676 crore
- PAT grew 63.57% YoY to Rs.1,127 crore; EPS Rs.42.49 vs Rs.25.97
- P&L-derived EBITDA margin expanded ~990 bps YoY to 42.60%
- Net material cost improved to 32.13% of revenue from 39.52% YoY
- H1 revenue +31.82% YoY keeps the double-digit FY27 growth guidance on track; H2 needs only −10.58% YoY to clear the floor
- Company remains debt-free with nil borrowings; H1 capex of Rs.872 crore vs Rs.1,544 crore in H1 FY26
Risk Factors
- CFO/PAT of 0.19x and CFO/EBITDA of 0.14x; FCF negative at −Rs.488 crore
- Rs.1,585 crore H1 inventory build and Rs.604 crore receivables increase; inventories up 40.11% vs Mar-26
- Inventory-normalized EBITDA margin of 25.44% is below 37.72% a year ago; reported margin expansion partly an accounting credit of Rs.631 crore
- Overseas subsidiaries contributed −Rs.13 crore in Q2, dragging consolidated PAT below standalone
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