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Dr Reddy's Laboratories Thursday posted near eight-fold jump in its first-quarter consolidated net profit to Rs 456 crore, helped by the low base of the previous year when sales were affected by the GST rollout and higher US and emerging market sales.
Revenue during the quarter grew 12 percent to Rs 3,721 crore compared to Rs 3,316 crore in the same quarter last year. Earnings before interest, tax, depreciation, and amortisation for the quarter was Rs 807.1 crore, an increase of 140 percent YoY. EBITDA margin of 21.7 percent improved by 1160 basis points over last year.
A Reuters poll of analysts forecasted fourfold increase in net profit to Rs 302.8 crore in Q1FY19. It estimated revenue to rise 21.48 percent YoY to Rs 3,946.8 crore in Q1FY19.
"I am pleased with our first quarter results, aided by the launch of generic Suboxone,” said GV Prasad, Chairman, CEO, and Co-chairman of Dr Reddy’s.
“Our focus on operational efficiencies has helped in significantly improving our margin profile. looking ahead, while we may continue to experience price erosion in the North America Generics market, we will also continue to drive growth and cost efficiencies, at the same time, enhancing our quality management systems and building healthy portfolios across the markets we serve," Prasad added.
Global generics revenue, which contributed around 80 percent to total income, increased 12 percent to Rs 3063.6 crore YoY, and 10 percent on a sequential basis.
The North America business that constitutes about 43 percent of global generic sales grew 6 percent Rs 1,590.3 crore in Q1 on YoY basis driven by contribution from new products, primarily generic de-addiction drug Suboxone, and partly offset by competitive pressures on some of the key molecules.
As of June 30, 2018, cumulatively 112 generic filings are pending for approval with the USFDA. Of these 109 abbreviated new drug applications (ANDAs), 61 are Para IVs out of which we believe 30 have 'First to File' status.
Emerging markets that contribute 18 percent of generic sales business declined 21 percent to Rs 664.3 crore in Q1. Revenues from Russia grew 9 percent to Rs 380 crore on account of new launches and volume traction in some of the key molecules.
Revenues from India grew 30 percent to Rs 607.4 crore in Q1FY19, helped by low-base last year. Europe sales declined 3 percent in Q1FY19 to Rs 200 crore on account of higher price erosion in some of its key products.
Pharmaceuticals services and active ingredients (PSAI) revenue during the quarter increased 16 percent to Rs 540.9 crore YoY. Proprietary products saw growth
R&D expenses in Q1 declined 4 percent to Rs 415.7 crore.
The results were announced after market hours.
Shares of Dr Reddy's rose 2.19 percent to close at Rs 2134.65 on BSE, the benchmark Sensex gained 0.34 percent to end 36,984.64 points.
"Top line grew 12.2% YoY to Rs 37.2bn, 1.6% above our estimates. US sales grew 7.3% sequentially at US$ 241mn (6% YoY). India business grew 30% YoY on the back of a favourable GST-hit base, but is flat sequentially and in line with our estimates. EM markets reported good growth of 16%YoY in Q1, higher than our estimates," said Amey Chalke, pharma analyst at HDFC Securties.
"We continue to have Neutal rating on the stock as we believe the pain in US business of DRRD is likely to continue for few more quarters with no visibility on Duvvada resolution," Chalke added.
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