Dr. Reddy’s Labs Q3 Results Review - Beat On Revenue, But Earnings Inline: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Dr. Reddy Laboratories Ltd.'s Q3 FY24 earnings (Rs 13,789 million) were in line with expectations, but revenue was above expectations, led by strong growth in North America (5.7% QoQ and 9.6% YoY). North America grew on back of base business (including gRevlimid). Gross margins were lower 20 bps QoQ as benefits from government grants which is deducted from the cost of sales was lower QoQ (1,140 million versus 1,598 million). Performance in branded markets was weak. Sales growth in India was lackluster at 5% YoY. Emerging markets performance also declined 2% YoY as Russia business declined 14% YoY owing to high base and unfavorable currency movement. Despite a strong beat on revenue, Ebitda was still in line with expectations, as company continues to ramp up investments in marketing and digitalization leading to selling, general and administration spending expanding 8% QoQ and 13% YoY. We await these investments to fructify into higher growth in the branded markets. We have revised our forecasts and roll over our price target to FY26E earnings per share. .Our revised target price is Rs 5,725 based on 16 times FY26E EPS. We expect Dr. Reddy to deliver ~7% / 6% revenue and Ebitda compound annual growth rate over FY23 to FY26E. We expect North America revenue to remain flattish or decline over the near to medium term owing to erosion pressures. New launches in North America may at best help Dr. Reddy's offset erosion pressures. In branded markets, we expect the company to clock high single digit growth. Pharmaceutical services and active ingredients business should grow low single digit in line with the long-term trend. We currently do not forecast any upside from China markets, wherein company has been consistently investing in new product filings to expand their current sales base meaningfully larger..Click on the attachment to read the full report:.Dr Reddy's Laboratories Q3 Results: Profit Up 11%, In Line With Estimates.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Dr. Reddy’s Labs Q3 Results Review - Beat On Revenue, But Earnings Inline: Systematix

Despite a strong beat on revenue, Ebitda was still in line with expectations, as Dr. Reddy's continues to ramp up investments in marketing and digitalisation leading to SG&A spending expanding.

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