There has been no stopping Divi's Laboratories on the bourses ever since it was listed in March 2003.

The scrip of the fledgling pharma company spurted 12.4% last week to Rs 360.95 -- a life-time high. "There is sustained buying interest in the stock," confirms a local dealer.

In fact, from the listing price of Rs 176.25 on 12 March 2003, the stock has more than doubled within 2 ½ months to the current Rs 360.95. The average daily volume in the stock on BSE since listing has been 2.6 lakh shares.

The latest surge on the counter comes on the back of healthy Q4 ended 31 March 2003 results that were announced Thursday.  The positive outlook for the current fiscal by the company also has been a major booster. Divi's has forecast a net profit of Rs 60-65 crore for FY 2003-04 on sales of Rs 310 crore.

However, analysts feel that Divi's guidance is quite conservative and the company may substantially outstrip the figures.

For FY 2002-03, Divi's reported a 19% growth in sales to Rs 246.52 crore and 50% jump in net profit to Rs 54.90 crore. The fourth quarter was particularly strong. Sales for the quarter ended 31 March 2003 were Rs 63.15 crore and net profit was Rs 19.16 crore.

Divi's Laboratories is emerging as a preferred partner for MNCs. The major revenue from contract research accrues only during and after the Phase III clinical trials. About 15 molecules have attained phase III in FY 2002-03 alone, as against 17 as at the end of the previous year. As a result, as of March 2003, the company has 22 molecules in Phase III or a later stage, in respect of its clinical trials.

In addition, the company has been approached by MNC pharma companies for 20 products in the launch stage, despite the fact that it did not work on these molecules in the clinical stage. This further demonstrates the company's solid standing and the MNCs faith in the company's ability to deliver qualitatively in time, and cost effectively.

To optimise the potential, the company prefers to be a partner of the MNC from the early stage. When the molecule is launched in the market, it prefers to be amongst top three suppliers of APIs. This enables the company to garner greater volumes from the product and also get superior returns thereof.

Besides producing generic active pharma ingredients (APIs) and intermediates for generics, the company has ventured into custom synthesis for select MNCs by developing intermediates for new chemical entities (NCEs) being developed by them. It associates with these MNCs at the early drug development stage with the ultimate aim of becoming a "preferred supplier" of APIs and intermediaries to such MNCs, when their discovery drugs are launched in the market.

Thus, the company builds its API pipeline and gets a ready market from MNCs, by associating with them right from the basic research stage.

Divi's Laboratories has been focussing on increasing its business in the regulated markets of Europe and the US. These constituted about 73% of the turnover in the half year ended 30 September 2002. The company's regulated market-intensive approach augurs well in view of the substantial potential and also superior margins therein.