Is the worst over for Divi's?

It's been on and off between the market and Divi's Laboratories. The stock has been one of the rising stars of the Indian Pharma space, posting negative returns in only two of the last 11 calendar years. Not just that, it has consistently maintained an operating margin higher than the industry median for the previous 10 years. However, the market's love for Divi's has soured recently. After posting a fairly weak set of results in Q3, the market sent the stock tumbling, and it fell nearly 10 per cent on the result day, further wounding the already limping stock. Here are the key factors that have left the Divi's bleeding. The aftermath of COVID Back in May 2021, when the pandemic was at its peak, US-based Merck selected Divi's laboratories to become the authorised manufacturer of API (active pharmaceutical ingredient) for the COVID drug 'Molnupiravir'. And it soon became evident why Divi's was picked ahead of the bunch. Thanks to the company's scale, it could supply the API in large quantities, which shot up its revenue for the next few quarters. Everyone expected that once COVID subsided, there would be a dip in revenue (revenue fell seven per cent in Q2 and 31.5 per cent in Q3). Ev