Divi’s Labs Signs Long-Term Deal, Announces ₹700 Crore Expansion Plan

Strategic Agreement to Boost Long-Term Revenue through Advanced Intermediates Supply

Divi’s Laboratories Ltd has signed a confidential long-term agreement with a leading global pharmaceutical company for the manufacturing and supply of advanced intermediates. The Hyderabad-based API and intermediates manufacturer disclosed this development on April 18, 2025, via a regulatory filing. Though the identity of the overseas partner remains undisclosed due to confidentiality clauses, the agreement is expected to be a significant revenue driver starting in FY28.

Under the terms of the deal, Divi’s Labs will supply advanced intermediates based on mutually agreed commercial parameters. The manufacturing operations are slated to commence by January 2027. The agreement does not include any upfront payment, with revenue generation anticipated once commercial production begins. The scale and longevity of the agreement indicate a sizable demand pipeline that could materially contribute to Divi’s top-line over the long term.

Divi’s stated that the supply arrangement would be supported by substantial manufacturing augmentation, indicating a deep-rooted commitment to the project’s execution. The company’s experience in high-volume supply chains and regulatory compliance makes it a credible partner for large-scale global collaborations in the pharma sector.

Highlights

• Divi’s Labs signs long-term advanced intermediates supply deal with unnamed global pharma firm.

• Commercial operations to begin in January 2027 with no upfront payments.

• Company expects significant revenue contribution starting FY28.

• Contract details remain confidential under non-disclosure agreement.

₹650–700 Crore Expansion Plan Funded by Internal Accruals to Support Project Execution

To facilitate the anticipated supply obligations under the agreement, Divi’s Labs announced a capital expenditure program ranging between ₹650 crore to ₹700 crore. The expansion will involve capacity additions at existing manufacturing sites and will be entirely funded through internal accruals, reflecting the company’s robust cash flow generation and conservative financial strategy.

The investment will enable the firm to establish the necessary infrastructure to meet long-term production requirements for the advanced intermediates segment. Divi’s Labs has historically focused on backward integration and cost-efficient manufacturing, which has helped maintain its margins and retain strategic partners globally.

This expansion aligns with Divi’s efforts to diversify its revenue base through multi-year global partnerships. Given that the firm is also a key player in custom synthesis for large pharmaceutical clients, the new facility may also serve adjacent opportunities beyond the current agreement.

Highlights

• ₹650–700 crore capacity expansion to be financed through internal accruals.

• Investment earmarked for upgrading and expanding manufacturing facilities.

• Aligns with long-term strategy to strengthen presence in global custom synthesis segment.

Market Response and Stock Performance Ahead of Announcement

Divi’s Labs shares closed 2% lower at ₹5,622 apiece on April 17, ahead of the Good Friday market holiday on April 18. The stock trades approximately 10.5% below its 52-week high of ₹6,285, though it has gained substantially from its 52-week low of ₹3,641. At current levels, Divi’s holds a market capitalization of around ₹1.5 lakh crore, reaffirming its status as one of India’s largest pharmaceutical companies by market value.

While short-term volatility affected share prices ahead of the disclosure, analysts expect the long-term agreement and the accompanying capacity build-out to enhance earnings visibility over the next 2–3 years. Investor sentiment may improve further as clarity emerges around the revenue potential of the new contract and its contribution to FY28 and beyond.

Highlights

• Divi’s Labs closed 2% lower at ₹5,622 on April 17.

• Stock remains ~10% below 52-week high, with market cap at ₹1.5 lakh crore.

• Long-term visibility from the new supply agreement may aid stock re-rating over time.