Dr. Reddy's Q1 Review - Aspirational Target Of 25% Ebitda, Vaccine Optionality Key Drivers: Dolat Capital
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Dolat Capital Report
Dr. Reddy Laboratories Ltd.’s reported an in-line Q1 on earnings aided by higher other income despite a miss of 250 basis points on Ebitda margins.
Revenue grew 11% y-o-y driven by India (Wockhardt portfolio integration and Covid-19 products), Europe (new launches) and rest of world off-setting the flattish performance in the U.S. and lower active pharmaceutical ingredient sales.
Lower export incentive, higher price erosion (lower volumes in hospital products) impacted gross margins (52.2% in Q1 versus 53.7% q-o-q).
Dr. Reddy's Ebitda margins at 20.7% was 250bps lower versus our expectation of 23% due to investments in digital initiatives, higher marketing spend in India and price erosion in the U.S.
Higher other income aided profit after tax at Rs 5.7 billion (versus our estimate of Rs 5.9 billion).
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