Dr Reddy's Labs Q1 profit growth may be over 2-fold on strong operational numbers

Pharma major Dr Reddy's Laboratories is expected to report more than two-fold increase in profit at Rs 272.7 crore for April-June quarter against Rs 126.3 crore in same quarter last fiscal, backed by strong operational performance and low base in Q1FY17.

Revenue is seen rising 4.6 percent year-on-year to Rs 3,383 crore in June quarter, according to average of estimates of analysts polled by CNBC-TV18.

Operating profit during the quarter is expected to jump 50 percent to Rs 601 crore and margin may expand 550 basis points to 17.8 percent compared with year-ago period.

In Q1FY17, revenue fell 14 percent, operating profit margin contracted by 1,370 basis points and profit was down 80 percent YoY as US business fell 16 percent and Rest of World down by 50 percent due to Venezuela business.

In Q1FY18, US business is likely to be flat YoY, which is expected to continue being impacted by pricing pressure and competition. In Q4FY17, US was down 8 percent QoQ with price pressure of 10-12 percent.

Analysts said US would see competition in key drugs such as Vidaza generic and full impact of withdrawal of Isotretenion. However, US could be aided by launch of Vyotrin generic, a cholesterol drug with size of over USD 125 million. Other drugs such as Angiomax generic (anticoagulant) and Doxil generic (cancer) may also aid US sales.

India business is expected to be impacted due to GST rollout but launch of Epclusa drug (Hepatitis C) in India could aid sales.

Russia / CIS business is likely to be strong with around 30 percent growth for Russian market.