Pharma major Dr Reddy's Laboratories' earnings are expected to be moderate during July-September quarter. Profit is seen rising 12 percent year-on-year to Rs 642.86 crore, according to average of estimates of analysts polled by CNBC-TV18. Bottomline may be supported by operational numbers and revenue growth but tax cost may hurt. Earnings will be announced on October 29.
Revenue is likely to increase 11 percent to Rs 3,978 crore from Rs 3,587.8 crore during same period.
Analysts feel Russia & Rest of the World (RoW) markets may have some impact on earnings this quarter. Russia revenue, in constant currency, may be healthy around 20-22 percent but due to Ruble depreciation of 35 percent against rupee, Russia & CIS business could see decline of 30-40 percent year-on-year.
Rest of the World (RoW) sales are largely dependent on Venezuela that contributed to around 65 percent of RoW revenue in FY15. Venezuela is expected to slowdown in Q2FY16 as analysts feel rate of repatriation from Venezuela has slowed. Outstanding amount for Dr Reddy's to repatriate is USD 60 million as of September against USD 50 million in June 2015.
Overall RoW revenue is expected to decline by 15-17 percent due to high base in year-ago period.
Analysts expect US revenue at around USD 285 million despite limited US approvals in FY16. US sales may grow due to growth in key high value assets and generic versions of drugs such as Dacogen, Vidaza, Valcyte & Namenda may continue to contribute to sales. Latest launch by company is Nexium generic and Mirapex generic.
Growth in India business may be healthy of around 14-17 percent, bolstered by consolidation of UCB business (that acquisition was completed on June 16).
Operating profit (earnings before interest, tax, depreciation and amortisation) may increase 23.7 percent year-on-year to Rs 1,008.65 crore and margin may expand 267 basis points to 25.4 percent. Margin could be supported by US markets & India negating Venezuela and Russia impact.
Key factors to watch out for would be commentary on Srikakulam, Nexium generic sales and Russia & Venezuela.
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