Dr Reddy's Q1 net profit plunges 69 pc to Rs 4,435 crore
Mumbai, July 22
Dr Reddy's Laboratories on Wednesday reported a 69 per cent year-on-year decline in its consolidated net profit for the first quarter of FY27, with earnings taking a hit from lower revenues in its global generics business, declining North America sales and disruptions in semaglutide supplies.
According to the company's regulatory filing with the National Stock Exchange (NSE), net profit attributable to the owners of the company stood at Rs 4,435 crore during the April-June quarter, compared with Rs 14,178 crore in the corresponding period of the previous financial year.
Revenue from operations declined 5.5 per cent year-on-year to Rs 8,070.5 crore from Rs 8,545.2 crore in the year-ago quarter.
The company's operating performance also weakened during the quarter. Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 60.4 per cent to Rs 861 crore from Rs 2,173 crore a year earlier, while EBITDA margin contracted sharply to 10.6 per cent from 25.3 per cent.
Other income, however, increased to Rs 355 crore during the quarter from Rs 290 crore in the corresponding period last year, as per its filing.
Dr Reddy's said it made a provision of Rs 240 crore towards inventory and other associated costs arising from semaglutide supply disruptions during the quarter.
Earlier this month, the company had announced that supplies of its generic semaglutide would remain unavailable in India and continue to face disruptions in Canada until at least late October after an impurity issue in the active pharmaceutical ingredient (API) forced it to suspend production of new batches.
Semaglutide, the active ingredient used in the blockbuster weight-loss drug Wegovy, has recently gone off patent in India, opening the market to domestic generic manufacturers.
The production disruption is expected to delay Dr Reddy's plans to strengthen its presence in the rapidly expanding semaglutide market.
The company's largest market, North America, witnessed a sharp decline in revenue, which fell 35.3 per cent year-on-year to Rs 2,205 crore during the quarter.
Reflecting the weak quarterly performance, shares of Dr Reddy's Laboratories ended 2.16 per cent lower at Rs 1,179.90 apiece on the NSE on Wednesday.
— IANS
Reader Comments
It's concerning to see such a sharp decline in EBITDA margin—down to 10.6% from 25.3%. That's a big red flag. Also, Rs 240 crore provision for inventory costs due to supply disruption? That's significant. Hope the management has a clear plan to fix the API impurity issue soon.
Yaar, this semaglutide disruption is a big blow. Wegovy was the next big thing for Dr Reddy's after patent expiry in India. But they've handled crises before—remember the USFDA issues? They sorted it out. Let's see if they can restart production by late October as planned. 🤞
A 35% drop in North America revenue is brutal—that's their largest market. But the global generics business overall seems to be struggling. The company needs to diversify geographically. India market still has potential, but they have to fix the supply chain first.
Honestly, I'm not surprised. Pharma stocks have been volatile lately, and Dr Reddy's has had its share of troubles. But Rs 4,435 crore profit even after a 69% drop is still a lot of money! 😅 The other income went up to Rs 355 crore, so they're not completely in the dumps.
I think the management should be more transparent about the API impurity issue. Investors deserve to know if it's a one-time problem or something systemic. Also, with competition in the weight-loss drug space heating up, Dr Reddy's can't afford to lose momentum.
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