Shares of Dr Reddy's Laboratories were trading under pressure on Thursday after after the drugmaker reported a weaker-than-expected June-quarter performance, hurt by lower US sales, a semaglutide-related inventory write-off and the continued decline in its blockbuster Lenalidomide business.
Dr Reddy's shares fell upto 6.92%, later recovering slightly to dip by 2.82% at Rs 1,149.50 apiece.
Dr Reddy's Labs Q1 Result Highlights (Cons, YoY)
- Net Profit falls 68.7% at Rs 444 crore versus Rs 1,418 crore (Estimate of Rs 737 crore).
- Revenue down 5.5% at Rs 8,100 crore versus Rs 8,572 crore (Estimate of Rs 8,221 crore).
- Ebitda down 60.4% at Rs 861 crore versus Rs 2,173 crore (Estimate of Rs 1,398 crore).
- Ebitda Margin at 10.6% versus 25.3% (Estimate of 17%).
- Other Income at Rs 355 crore versus Rs 290 crore.
- Global Generics Revenue down 4.8% at Rs 7,208 crore.
Morgan Stanley maintained its 'Equal-weight' rating but trimmed its target price to Rs 1,200 from Rs 1,215. The brokerage said adjusted revenue and EBITDA came in 2% and 13% below estimates, respectively, describing earnings as being "at the trough."
Bank of America reiterated its 'Buy' rating while reducing its target price to Rs 1,480 from Rs 1,500. It attributed the weak quarter to lower US sales and the semaglutide API disruption but said confidence in the resumption of semaglutide remains the biggest catalyst for the stock. The brokerage expects margins to recover in the second half.
Citi remained the most cautious, maintaining its 'Sell' rating and lowering its target price to Rs 1,040 from Rs 1,070. It said the weak quarter reinforced concerns over profitability, cutting its FY27 and FY28 earnings estimates by 24% and 8%, respectively.
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