Dr Reddy’s Laboratories (DRL) reported a net profit of ₹ 1,307 crore for the quarter ended March (Q4FY24), representing a 36% year-on-year increase from ₹ 159.2 crore in the same quarter of the previous year. Despite this seemingly positive growth, the company’s share price experienced a significant 5% drop today.
The company’s net profit exhibited a 3% sequential decline compared to ₹ 13,738 crore reported in the December’2023 quarter. North America sales accounted for 45% of the company’s overall revenues and grew 29% year-on-year to ₹ 3262.6 crore, although this also reflected a 3% sequential decrease.
Brokerage firm Nomura noted the company’s strong gross margin and operational performance in Q4, attributing it to Revlimid sales. Nuvama Institutional Equities echoed this view, highlighting the continued benefit of Revlimid contributions to the US business. However, Nuvama anticipates elevated R&D costs relative to sales in the coming years due to Dr Reddy’s Horizon 2 program.
Jefferies, a global brokerage firm, expressed concerns that the company’s EBITDA margin for FY25 may face pressure due to a weak US launch pipeline. Meanwhile, Motilal Oswal Financial Services predicts a moderated earnings growth rate of 3.5 percent CAGR over FY24-26 as the generic market share of Revlimid gradually increases.
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