Dr. Reddy’s Q3 Results: Surprise Loss On Impairment Costs
Dr. Reddy’s loss stood at Rs 570 crore in the October-December period against a profit of Rs 485 crore a year ago.
Dr. Reddy’s Laboratories Ltd. posted a surprise loss in the quarter ended December on account of impairment costs.
The drugmaker’s loss stood at Rs 570 crore in the October-December period against a profit of Rs 485 crore a year ago, according to an exchange filing. A consensus of analysts tracked by Bloomberg had estimated the company to post a profit of Rs 492 crore.
Dr. Reddy’s total impairment charge stood at Rs 1,320 crore during the quarter—Rs 1,113.7 crore towards the generic of Nuvaring (a vaginal ring to prevent pregnancy) and Rs 206.3 crore towards other product related intangibles.
The company’s revenue, however, rose 14 percent year-on-year to Rs 4,384 crore. That compares with the Rs 4,194-crore forecast.
Its operational performance, too, beat estimates. Operating income, or earnings before interest, tax, depreciation and amortisation, rose 43 percent over last year to Rs 1,019 crore, compared with the Rs 916-crore estimated. Operating margin expanded to 23.2 percent from 21.8 percent a year ago.
“The numbers are in line with street’s expectations with a beat on the margin front,” said Shrikant Akolkar, senior research analyst at Ashika Stock Broking. “The Nuvaring impairment is due to their competitor Amneal launching a similar drug but I would not read much into that as numbers are good operationally as well.”
Dr. Reddy’s reported a year-on-year sales growth of 8 percent at Rs 1,600 crore in North America, its largest market. But its domestic sales grew 13 percent over last year to Rs 764 crore.
This comes even as the Indian pharmaceutical market’s sales growth slowed in the quarter ended December.
Edelweiss research, in a pre-earnings report, had said the launch of biosimilar Avastin (used to treat diabetic eye disease and other problems of retina) and its entry into the nutrition segment was expected to aid the Hyderabad-based company’s domestic business.
Shares of Dr. Reddy’s rose as much as 2 percent after the earnings announcement, compared with the 0.4 percent drop in the benchmark Nifty 50 Index.
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