A slowdown in the contract research and manufacturing services (CRAMS) industry resulted in lower earnings for Divi's Labs. However, the segment is steadily recovering. Besides contract manufacturing, Divi's is engaged in manufacturing active pharmaceutical ingredients and nutraceuticals that have clearer earnings visibility. Nutraceuticals, though a small segment now, has a good growth potential. The company logged strong growth in the December 2010 quarter. Its high operating margins, strong balance sheet and debt-free status makes it an attractive player in the CRAMS segment.
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