Dr Reddy’s Q1 Results: Profit Falls 12% Due To Lower India Sales

Dr. Reddy's Laboratories Ltd.'s quarterly profit fell on account of lower domestic sales. Still, it managed to beat estimates.

Net profit declined 12% year-on-year to Rs 594.6 crore in the three months ended June, according to an exchange filing. That compares with the Rs 510-crore consensus estimate of analysts tracked by Bloomberg.

The Hyderabad-based drugmaker reported a 10% year-on-year drop in India business revenue at Rs 626 crore. This came on the back of lower sale of prescriptions drugs and reduced patient footfalls in pharmacies or clinics due to the Covid-19 lockdown.

The company's revenue in North America, the largest market, rose, aided by new launches and a favorable forex rate. But the benefit partially offset by price erosion. Dr. Reddy's revenue from the European market, too, jumped on account of new launches.

• Its revenue, however, rose 15% to Rs 4,426.5 crore. That's higher than the Rs 4,195-crore forecast.
• Operating profit, or earnings before interest, tax, depreciation and amortisation, rose 51% to Rs 1,121.3 crore, compared with the estimated Rs 901 crore.
• Ebitda margins expanded to 25.3% from 19.2% last year.

"The current quarter's performance has been strong across all parameters. We ensured continuity of business operations despite the challenging times. We have started integration of the acquired business from Wockhardt and executed two important licencing arrangements for treatment options for Covid-19. Currently, we are working towards bringing both these drugs to multiple markets," GV Prasad, co-chairman and managing director, said in the filing.

Dr. Reddy’s, in the three months ended March, had acquired select divisions of Wockhardt's branded generics business in India and a few other international territories like Nepal, Sri Lanka, Bhutan and Maldives. The deal, comprising a portfolio of 62 brands in multiple therapy areas, was done on a slump sale basis for a consideration of Rs 1,850 crore.

Segment Break-Up (Year-On-Year)

• Revenue from active pharmaceutical ingredient business rose 70% to Rs 1,009 crore.
• Global generics revenue rose 6% to Rs 3,057 crore.
• Proprietary products revenue fell 80% to Rs 5.6 crore.

Geographic Break-Up (Year-On-Year)

• North America revenue rose 6% to Rs 1,728.2 crore.
• Europe revenue increased 48% to Rs 355.1 crore.
• India business revenue fell 10% to Rs 626 crore.
• Emerging markets revenue rose 9% to Rs 798.2 crore.

Still, shares of Dr. Reddy's rose as much as 3.9% to Rs 4,209.45, the day's high, after the results were announced. That compares with a 0.45% drop in the benchmark Nifty 50 Index.