Dr Reddy’s Laboratories misses Q3 revenue, profit growth estimates

Drugmaker Dr Reddy’s Laboratories reported modest revenue growth for the three months ended December 31 while profit was a tad below analyst expectations despite shooting up from a year earlier.

The pharmaceutical company posted a net profit of Rs 707 crore, up from Rs 19.8 crore from a year earlier (adjusted for one-time impairment net profit of Rs 624 crore last year).

Analysts were expecting the drugmaker to post profit in the Rs 710-820 crore range.

On a sequential basis, net profit declined 29%.

Revenue growth, too, came a bit below forecast. The company’s revenue rose 8% year-on-year to Rs 5,320 crore, but was down 8% from the second quarter ended September 30.

The company’s share price, which has skid over a fifth since mid-2021, rose 0.7% and was at Rs 4,286 at 1.30 PM, soon after the company declared its results, in a strong Mumbai market on Friday.

Other key highlights

1) EBITDA rose 7% YoY to Rs 1,266 crore, but down 19% quarter on quarter.

2) EBITDA margins slipped to 23.8% from 24% in the year-ago period and 27% clocked in Q2 FY22.

3) Global generics revenue rose 9%, led by 20% growth in emerging markets, and 50% jump in markets outside of Russia and CIS states.

4) North America generics business grew 7%, led by new product launches, increase in volumes of base business and a favourable forex rate.

5) Europe business was down 2% from a year ago due to price erosion in some existing products.

6) Revenue growth in India was 7%, partly offset by a decrease in the sales volume of Covid-related products.

7) Pharmaceutical Services and Active Ingredients (PSAI) revenue was at Rs 727 crore, up 4% YoY driven majorly by new product launches.

Management commentary

GV Prasad, co-chairman and managing director of Dr Reddy’s Laboratories, said: “We delivered a steady performance in Q3 with healthy EBITDA and strong cash generation, while continuing to invest in building a pipeline of products across businesses.”