Dr. Reddy's Q4 Results: Profit Rises, Misses Estimates

Dr. Reddy's Laboratories Ltd. saw its net profit rise 9.9 times during the fourth quarter of fiscal 2023, missing analyst estimates.

The Hyderabad-based drugmaker's profit stood at Rs 960 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 1,034 crore consensus estimate of analysts tracked by Bloomberg.

Sequentially, the profit fell 23%.

Dr. Reddy's Q4 FY23 Highlights (YoY)

• Revenue rose 15% to Rs 6,315 crore, as compared with an estimate of Rs 6,248 crore.

• Ebitda was up 33% at Rs 1,588 crore, against a forecast of Rs 1,591 crore.

• Ebitda margin was at 25.1% versus 21.8% a year ago and an estimate of 25.5%.

The board has recommended a dividend of Rs 40 per share.

"FY23 has been a year of record sales, profits and cash flow, driven by our performance in U.S. generics. We will continue to deliver on our purpose, invest in growth drivers and promote a culture that is innovative and collaborative, ensuring the future of our business," said GV Prasad, co-chairman and managing director at Dr. Reddy's, in the exchange filing.

Other Highlights (YoY)

• Revenue from the mainstay North American market rose 27%, contributing 40% of the total sales. This was driven by new product launches and favourable forex movement, which was partly offset by price erosion.

• Six new products were launched in the U.S. in the fourth quarter.

• European business rose 12%, accounting for 8% of the revenue.

• India revenue was up 32%, contributing 20% of the total revenue for the quarter. Growth was driven by favourable price variance, new product launches, and non-core brand divestments, the filing said.

• Emerging market sales declined 7%, making up 18% of the revenue for the quarter. Of this, Russia reported a year-on-year sales decline of 24%, mainly attributable to divestment income and higher channel inventory.

• Pharmaceutical services and active ingredients segment grew 3%. It made up 12% of the total revenue.

• Expenditure on selling, administration and distribution rose 15% to Rs 1,800 crore.

• Research and development expenses stood at 8.5% of revenue. “We continue our focus on investing in R&D to build a healthy pipeline of new products across our markets for both small molecules and biosimilars,” the company said in the filing.

• The company has a net cash surplus of Rs 5,050 crore, as on March 31.

Shares of Dr. Reddy's Laboratories closed 1.27% lower, prior to the announcement of the results, as compared with a 0.29% rise in the benchmark Sensex.

(Corrects an earlier version which said the profit was flat)