Dr Reddy's Laboratories Q1 Results: Profit Up 1.8%, Misses Estimates

Dr Reddy's Laboratories Ltd.'s consolidated net profit rose 1.8% in the first quarter of fiscal 2026, missing analysts' estimates.

The pharmaceutical company posted a bottom line of Rs 1,418 crore, according to an exchange filing on Wednesday. That compares with the Rs 1,514-crore estimate that analysts tracked by Bloomberg had projected.

Dr. Reddy's Q1FY26 Highlights (Consolidated, YoY)

• Revenue up 11.4% at Rs 8,572 crore versus Rs 7,696 crore (Bloomberg estimate: Rs 8,693 crore)

• Ebitda up 2% at Rs 2,174 crore versus Rs 2,130 crore (Bloomberg estimate: Rs 2,332 crore)

• Margin at 25.4% versus 27.7% (Bloomberg estimate: 26.8%)

• Net profit up 1.8% at Rs 1,418 crore versus Rs 1,392 crore (Bloomberg estimate: Rs 1,514 crore)

The company reported broad-based revenue growth in the June quarter. This growth was primarily supported by contributions from the recently acquired consumer healthcare portfolio, specifically in nicotine replacement therapy (NRT), alongside consistent performance within our branded markets.

The gross margin for Q1 was recorded at 56.9%. This represents a year-on-year decline of 350 basis points but an improvement of 134 bps quarter-on-quarter. The YoY decline was predominantly attributed to increased price erosion within the generics segment and reduced operating leverage. This impact was partially offset by a favourable product mix.

Regional performance highlights are as follows:

North America: Revenues for Q1 FY26 came in at Rs 3,410 crore, reflecting an 11% YoY decline and a 4% QoQ decline. This reduction was primarily driven by increased price erosion observed in certain key products, including Lenalidomide. During the quarter, the company launched five new products in the US market.

Europe: The Q1 revenue reached Rs 1,270 crore, marking a 142% YoY growth and flat QoQ growth. This figure includes revenues generated from the acquired NRT business. The growth in Europe was largely driven by the NRT portfolio and incremental contributions from new product launches. These gains were, however, partly mitigated by price erosion.

India: The company logged a revenue of Rs 1,470 crore, indicating an 11% YoY growth and a 13% QoQ growth. The growth in this region was a result of new product introductions, strategic price increases, and effective commercial execution. The company launched five new brands in India during the quarter.

"We delivered double-digit growth this quarter over the same period last year, reflecting our strength in branded markets and positive momentum in the Nicotine Replacement Therapy portfolio. The pricing pressure on Lenalidomide is expected to intensify in the US generics market. We remain focused on strengthening our base business by delivery of our pipeline assets, improving overall productivity and business development", said said G V Prasad, the company's co-chairman and MD.

Shares of Dr Reddy's closed 0.65% higher at Rs 1,247.4 apiece on the NSE, compared to a 0.63% rise in the benchmark Nifty 50.