Dr Reddy’s beats street estimates with 30% jump in Q2 profit

Dr Reddy’s Laboratories Ltd, one of the largest homegrown drugmakers, came up with strong results for the second quarter with double-digit growth in both revenue as well as profit.

Dr Reddy’s consolidated net profit rose 30.2% to Rs 992 crore from Rs 762.3 crore in the quarter ended September 2020, powered by a sharp jump in numbers from its proprietary products unit.

The company had clocked a net profit of Rs 571 crore in Q1. This translates into a 74% jump in earnings on a sequential basis.

Meanwhile, revenue for the second quarter rose 17.7% to Rs 5,763.2 crore from Rs 4,897 crore a year earlier and compared with Rs 4,919 crore in the quarter ended June 30.

Analysts were expecting revenue to grow in single digits to around Rs 5,100-5,200 crore while they expected profit to be under Rs 700 crore.

Dr Reddy’s share price was up 1% at Rs 4,621 apiece in a weak Mumbai market as of 3.30 PM on Friday.

Dr Reddy’s Q2: Other highlights

1) EBITDA margin rose to 27% from 20.7% in same quarter last year and 25.9% in Q1.

2) R&D expense proportion declined to 7.7% as against 8.9% in Q2 FY21 and 9.2% in Q1.

3) Global generics unit’s revenue climbed 19% to Rs 4,743 crore, powered by 50% growth in emerging markets (excluding India) to Rs 1,298.5 crore.

4) India revenue was up 25% to Rs 1,140.2 crore. European sales grew 10% to Rs 413.5 crore.

5) The mainstay North America unit saw a 3% growth over the year-ago period.

6) Pharmaceuticals and API business declined 2% to Rs 8,372 crore over Q2 FY21.

7) Proprietary business jumped on account of recognition of a licence fee associated with the sale of US and Canada territory rights for ELYXYB (celecoxib oral solution) 25 mg/ml to BioDelivery Sciences International, Inc.

Dr Reddy’s management commentary

GV Prasad, the company’s co-chairman and MD, said the company recorded an improvement in its financial performance across its businesses.

“While we continue to strengthen our core businesses of generics and APls, we are also making investments in our long-term growth drivers and deeper innovation capabilities,” he said.

“Our focus remains on meeting unmet patient needs around the world in keeping with our purpose,” he added.