Dr. Reddy Labs and Torrent Pharma - Quarterly Results

Dr. Reddy's Laboratories reported 11.72% growth in net sales at Rs.4,945 crore for the Jun-21 quarter. However, net profits were down -36% at Rs.380 crore on account of a Rs.184 crore asset impairment write-off in the Jun-21 quarter. Global generics sales were higher yoy but the API business was down. For Reddy Labs, the US accounts for 35% of revenues while India and other emerging markets account for 41%.

Dr. Reddy's Laboratories Quarterly Results

Gross margins at 52.2% was marginally lower than previous quarters. The positive feature of the quarter was R&D expenses at Rs.453 crore or 9.2% of revenues.  For the Jun-21 quarter, the EBITDA margins stood at 20.7% while free cash flows (FCF) was at Rs.680 crore. Indian revenues were driven by COVID drug sales. Net margins for Jun-21 quarter stood at 7.69%; lower than 13.43% in Jun-20 quarter and 11.69% in Mar-21 quarter.
Among brokerages, Axis Securities, HDFC Securities and BNP Paribas have upgraded their price target while ICICI Securities had downgraded Reddy Labs to Hold.

Torrent Pharma Ltd reported 3.79% growth in net sales at Rs.2,134 crore for Jun-21 quarter. Net profit for the Jun-21 quarter was up 2.8% at Rs.330 crore on stable EBITDA margins and gross margins in the India business. During the quarter, Torrent Pharma launched anti-COVID drug, Bariticinib, which is currently under clinical trials for Molnupiravir. India revenues were up 18% at Rs.1,093 crore while the US sales were down -29% at Rs.266 crore. Due to price erosion. Germany grew 5%, Brazil 9% while CRAMS vertical grew 6% yoy.

Torrent Pharma Quarterly Results

Torrent Pharma reported gross margins of 72.4% and EBITDA margins of 34% in the Jun-21 quarter. Till June, Torrent Pharma had 54 ANDAs pending for approval with USFDA with 7 tentative approvals in place. Net margins were 15.46% for Jun-21 quarter compared to 15.61% in Jun-20 quarter and 16.73% in Mar-21 quarter.
Among brokerages, Motilal Oswal and ICICI Securities have upgraded their target for Torrent Pharma while BNP Paribas has downgraded its target.