Divis Laboratories' margin slips as costs outpace revenue growth
Net profit rose 13.44%, but other income contributed 16.1% of pre-tax profit and the stock's five-session fall exceeded its usual post-results move.
Filed 27 May 2026, 17:38 IST · after market close · Divis Laboratories Ltd (DIVISLAB)
Key takeaways
- Consolidated revenue grew 9.52% year on year, but expenses rose 11.65%, narrowing operating margin by 1.28 percentage points.
- Net profit increased 13.44% to Rs 751 cr, helped by other income equal to 16.1% of pre-tax profit and a 1.37 percentage-point lower tax rate.
- The stock fell 5.14% five sessions after the results, a larger decline than its 3.42% median move after the past eight results.
Price around the results
Revenue grew, but operating leverage weakened
Consolidated revenue increased 9.52% year on year and 8.72% sequentially, while operating profit grew only 5.42% and 4.94%, respectively. Expenses grew faster than revenue in both comparisons, so operating margin narrowed by 1.28 percentage points year on year and 1.19 percentage points sequentially. The margin was 32.99%, below 34.18% in Q3FY26 but above 30.25% in Q1FY26.
Higher other income supported reported profit
Other income rose 80.23% year on year and 1007.14% sequentially, accounting for 16.1% of pre-tax profit. This made the reported profit increase less dependent on operating growth, with profit before tax rising 11.46% year on year against 5.42% operating-profit growth. The tax rate also fell by 1.37 percentage points year on year and 3.25 percentage points sequentially, supporting net profit growth of 13.44% year on year and 28.82% sequentially.
Margin remains above the Healthcare peer median
Divis Laboratories' 32.99% operating margin was 9.61 percentage points above the 23.38% median for the 48 Healthcare peers that had reported the quarter. The sequential margin decline follows an improvement from 32.71% in Q2FY26 to 34.18% in Q3FY26, so the latest quarter interrupts that recovery rather than extending a continuous decline.
The post-results decline was larger than usual by day five
The stock fell 1.89% on the reaction day and 5.14% after five sessions, underperforming the market by 4.15% over those five sessions. Across its past eight results, the stock rose four times and fell four times, with a median absolute move of 3.42%, making the latest five-session decline larger than its typical reaction.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,831 cr | ₹2,604 cr | +8.72% | +9.52% |
| Other income | ₹155 cr | ₹14 cr | +1007.14% | +80.23% |
| Expenses | ₹1,897 cr | ₹1,714 cr | +10.68% | +11.65% |
| Operating profit | ₹934 cr | ₹890 cr | +4.94% | +5.42% |
| Operating margin (%) | 32.99% | 34.18% | — | — |
| Interest | ₹6 cr | ₹6 cr | +0.00% | +500.00% |
| Depreciation | ₹120 cr | ₹118 cr | +1.69% | +12.15% |
| Profit before tax | ₹963 cr | ₹780 cr | +23.46% | +11.46% |
| Tax | ₹212 cr | ₹197 cr | +7.61% | +4.95% |
| Net profit | ₹751 cr | ₹583 cr | +28.82% | +13.44% |
| EPS (₹) | ₹28.31 | ₹21.98 | +28.80% | +13.56% |
Operating margin of 32.99% compares with a Healthcare sector median of 23.38% across 48 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -1.89% | -3.21% |
| Next session | -1.95% | — |
| 5 sessions | -5.14% | -4.15% |
| 15 sessions | -2.53% | — |
| 30 sessions | -1.92% | — |
Volume on the results session was 2.61× its 20-day average.
What to watch
- Whether operating margin recovers from 32.99% after the 1.19 percentage-point sequential decline.
- Whether expense growth stays below the 10.68% sequential rate that exceeded revenue growth of 8.72%.
- Whether other income remains below its current 16.1% share of pre-tax profit.