IGI Logo

Below is quote on Dr.Reddy’s Laboratories reported good revenue by Mr. Yash Gupta, Equity Research Associate, Angel Broking Ltd   

Dr.Reddy’s Laboratories reported good revenue growth but margins below the expectation.

Dr.Reddy’s Laboratories Ltd reported total revenue from operations at ₹4919 crores, up by 11% YoY, from ₹4417 crores in Q1FY21. India generic business has done well for the company, up by 69%, at ₹1060 crores while API was down by 12% at ₹754 crores. Gross profit margins were down by 380bps YOY at 52.2% as raw material prices have gone up in the last 2 quarters. Profit before tax for the quarter was down by 16% at ₹742.5 crores as compared to ₹878.9 crores in Q1FY21. EBITDA margins have also come down from 26.3% to 20.7% in Q1FY22. Profit after tax for the quarter came in at ₹570.8 crores in Q1FY22 as compared to ₹579.3 crores, down by 1%.

We believe that the weaker set of numbers reported by Dr.Reddy’s Laboratories ltd are due to sales degrowth in API business and muted sales growth in USA business. India business and Europe business have reported sales growth of 69% and 12% respectively. Companies' margins are down significantly and were below the market expectation. Companies gross margin and EBITDA margin are down by 380 bps and 560 bps YOY as Q1FY2021 was high base quarter for the company, but margins were down on QoQ basis as well.

Above views are of the author and not of the website kindly read disclaimer