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Dr Reddy's Labs Q1 profit falls 13%; gross margin improves 430 bps YoY

The stock rallied 26 percent during June quarter and gained 41 percent year-to-date, largely due to demand for healthcare and pharmaceutical segments amid COVID-19 crisis.

July 29, 2020 / 02:58 PM IST
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Dr Reddy's Laboratories on July 29 reported a 12.6 percent year-on-year (YoY) drop in consolidated net profit at Rs 579 crore for the quarter ended June 2020.

The profit in the corresponding quarter of last fiscal stood at Rs 662.8 crore which was boosted by the settlement claim of Rs 345.7 crore received from Celgene in April 2019 with respect to the cancer drug.

Revenue from operations during Q1FY21 stood at Rs 4,418 crore, up 15 percent YoY.

Gross margin came at 56 percent in Q1FY21, up 430 bps over the previous year against 51.7 percent in Q1FY20 and up 450 bps against 51.5 percent in Q4FY20.

EBITDA improved 2 percent YoY to Rs 1,162 crore but margin dropped 320 bps YoY to 26.3 percent.

The company's Pharmaceutical Services and Active Ingredients (PSAI) saw 88 percent YoY growth on account of higher volumes of certain products, an increase in new product sales and favorable forex.

On the front of segment wise revenue, the India market witnessed a degrowth of 10 percent YoY while the Europe market grew 48 percent YoY. North America and Emerging Markets grew 6 percent and 9 percent, respectively.

Commenting on the results, Co-chairman & MD, G V Prasad said: "The current quarter's financial performance has been strong across all parameters. l am glad that we have been able to serve our patients well and ensured continuity of business operations despite the challenging times."

"We have started integration nf the acquired business from Wockhardt and executed two important licencing arrangements for treatment options for COVID-19. Currently, we are working towards bringing both these drugs to multiple markets," he added.

Talking about the COVID-19 impact, the company said while the sales volume were impacted in some of its markets due to lower prescriptions generated and fall in patient footfalls in pharmacies/ clinics, the pricing environment was relatively stable, new products launches continued and depreciation of rupee against the US dollar and euro supported the business.

The stock has rallied 26 percent during the June quarter and gained 41 percent year-to-date, primarily driven by demand for healthcare and pharmaceutical counters amid the COVID-19 crisis.

Moneycontrol News
first published: Jul 29, 2020 02:26 pm