Liquidity Analysis of Divis Laboratories Limited

Liquidity Analysis of Divis Laboratories Limited
Case Code: CLFIN045
Case Length: 5 Pages
Period: 2021-24
Pub Date: 2025
Teaching Note: Available
 Price: Rs.200
Organization : Divis Laboratories Limited
Industry :Pharmaceuticals & Biotech
Countries : India
Themes: Financial AnalysisFinancial Analysis
Liquidity Analysis of Divis Laboratories Limited

Abstract

Two trainees from an investment bank, as a part of their training program, were planning to make a presentation on the liquidity position of Divis Laboratories Limited for the financial years 2021-22 to 2023-24.

Divis Labs is a leading pharma company in India listed under the category of small caps segment in the Bombay Stock Exchange and National Stock exchange

The present case study provides scope to discuss the concept of liquidity analysis and the process of analyzing and interpreting a company's liquidity position using liquidity ratios.

Issues

  • The concept of liquidity analysis
  • The application of liquidity ratios
  • The liquidity position of Divis Laboratories Limited
  • The Cash Conversion Cycle (CCC) and its role in liquidity management

Introduction

As part of their training program, two trainee investment advisors decided to present a report on the liquidity position of India-based multinational pharmaceutical company Divis Laboratories Limited (Divis Labs). They collected the following information about the company: Divis Labs was established in the year 1990 by Murali Divi. The company was involved in manufacturing Active Pharmaceutical Ingredients (APIs) , Custom Synthesis , and Nutraceuticals . As of 2023-24, Divis Labs was recognized as one of the world’s largest API manufacturers, offering a selective 30 Generic APIs. It had the world’s largest API manufacturing facility and was among the top 3 API manufacturers in the world. The company enjoyed a leadership position in the API segment with a capacity to produce over 30 API molecules for Anti-depressant, Anti-inflammatory, Anti-neoplastic, Anti-Parkinson, Anti-hypersensitive, Antiviral, Anti-hypertensive, Anticonvulsant, Antipyretic, and other drugs (Refer to Exhibit I for the List of APIs and Specialty Chemicals manufactured by Divis Labs)..

Keywords

Liquidity analysis; Short-term solvency; Current Assets; Current Liabilities; Liquidity Ratios; Current Ratio; Quick Ratio; Cash ratio; Divis Laboratories Limited;

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