Dr Reddy's Laboratories Q1 Results: Profit Up 18%, Beats Estimates

Revenue up 29% to Rs 6,758 crore, while Ebitda margin was at 30.5% versus 18% a year ago.

<div class="paragraphs"><p>Dr. Reddy's Laboratories building (Source: Company)</p></div>
Dr. Reddy's Laboratories building (Source: Company)

Dr. Reddy’s Laboratories Ltd.'s net profit rose 18% in the first quarter, beating analyst estimates.

The drugmaker's profit increased to Rs 1,405 crore in the April–June quarter, according to an exchange filing on Wednesday. That compares with the Rs 1,008 crore consensus estimate of analysts tracked by Bloomberg. Sequentially, the profit jumped 46%.

Dr Reddy's Q1 FY24 Highlights (YoY)

  • Revenue up 29% to Rs 6,758 crore, as compared with an estimate of Rs 6,343 crore.

  • Ebitda up 119% to Rs 2,063 crore against a forecast of Rs 1,620 crore.

  • Ebitda margin was at 30.5% versus 18% a year ago and an estimate of 25.5%.

Other Highlights (YoY)

  • Revenue from the mainstay North American market rose 79%, contributing 47% of the total sales. This was driven by new product launches, continued momentum in existing products, and favourable forex rate movements partly offset by price erosion, the company said in the filing.

  • Six new products were launched in the U.S. in the June quarter and two in Canada. The company also commercialised the generic prescription portfolio acquired from Mayne Pharma.

  • European business rose 22%, accounting for 8% of the revenue.

  • India revenue was down 14%, contributing 17% of the total revenue for the quarter. "Excluding brand divestment income, sales of divested portfolio from base, and NLEM-related price reduction impact, India business registered high single-digit growth." The filing said that the growth was mainly on account of an increase in base business volume.

  • Emerging-market sales rose 28%, making up 17% of the revenue for the quarter. Of this, Russia reported year-on-year sales growth of 75%, mainly driven by an uptick in base business, price increases, biosimilars, and low base.

  • The segment of pharmaceutical services and active ingredients fell 5%. It made up 10% of the total revenue.

  • Expenditure on selling, administration and distribution rose 14% to Rs 1,770 crore.

  • Research and development expenses stood at 7.4% of revenue.

  • The company has a net cash surplus of Rs 4,980 crore as of June 30.

"We delivered strong sales growth and witnessed robust margin expansion in Q1 FY24 driven by market share gains and new product momentum in our U.S. generics business and superior performance in Russia," Managing Director GV Prasad said.

They are on track in executing strategy, delivering growth while continuing to invest in future growth drivers and innovation to create sustainable value, he said.

Key interview highlights:

  • MV Ramana, CEO of branded markets told BQ Prime that they are maintaining 25% Ebidta and return on capital guidance for FY24.

  • It has a strong pipeline of product launches in U.S. slotted for FY24 and FY25. The company is working on products in oncology, injectables, and complex assets which could be brought to the markets in the next one or two years.

  • India continues to be the number one growth market. There are three pivots for growth—innovative products in existing therapeutic areas, consumer health and digital initiatives. They are also looking at in-licensing and brand acquisitions in India.

  • They are seeing a positive evolution continuing in Russia. In China, they are targeting a total 14 to 15 products approvals, including the four approved this year.

Shares of Dr Reddy's closed 0.93% higher on the BSE before the announcement of the results, as compared with a 0.53% rise in the benchmark Sensex.

Watch the full interview below:

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