Pharmaceutical major Dr Reddy's Laboratories on October 28 reported better-than-expected 12 percent year-on-year (YoY) growth in consolidated net profit at Rs 1,113 crore for the quarter ended September 30 against Rs 992 crore in the year-ago quarter.
The Hyderabad-based drugmaker also reported a 9 percent increase in consolidated revenue at Rs 6,306 crore against revenue of Rs 5,763 crore in year-ago period. Sequentially, consolidated revenue grew by 21 percent.
The company beat the Street estimates, as analysts had expected the company to report a 19.4 percent on-year decline in consolidated net profit to Rs 799.8 crore, while revenue was seen falling 1.8 percent on-year to Rs 5,659.3 crore.
"We are pleased with the strong financial performance in the current quarter, driven by the launch of Lenalidomide capsules in the US market”, said GV Prasad, Co-Chairman and Managing Director.
Lenalidomide is used in the treatment of blood cancer.
“Our focus is to build a robust pipeline with products that improve affordability and access to patients globally and we continue to progress well in our productivity, innovation and sustainability agenda," he added.
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Gross margins
The performance was aided by a 6 percent YoY reduction in the cost of revenue to 41 percent, which on a sequential basis was lower by close to 9 percent, the company said.
The gross margins for the quarter at 59.1 percent were 570 basis points higher from 53.4 percent a year ago. The gross margin in the quarter ended June 30, 2022 stood at 49.9 percent.
SG&A and R&D Expenses
The selling, general and administrative (SG&A) expenses for the quarter as a percentage of revenue were down to 26.3 percent from 27.7 percent in the year-ago period and 29.7 percent during the previous quarter.
The expenses on research and development (R&D) were stable at 7.7 percent YoY but were down from 8.3 percent in the previous quarter.
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Revenue nix
North America continues to be the largest contributor to the company’s revenues with 44 percent share and was followed by emerging markets (19 percent share), India (18 percent share), PSAI (10 percent), Europe at 7 percent and others at 1 percent of the total revenue.
The company generated Rs 2,800 crore of its revenue from North America, with a YoY growth of 48 percent and a growth of 57 percent on quarter.
The revenue from the Emerging Markets at Rs 1,225 crore was down 6 percent YoY but up 36 percent QoQ.
Within Emerging markets, the sequential growth was driven by 85 percent growth in Russia and was primarily due to a lower sales base of Ql FY23. The rest of world witnessed a sequential growth of 6 percent, driven by new product launches, partly offset by a reduction in base volumes and sales price of some of our products.
India, with revenues of Rs 1,150 crore, grew 1 percent on-year but was down 14 percent on a sequential basis.
Europe managed to grow at 2 percent YoY and 1 percent on QoQ to Rs 420 crore.
Its Pharmaceutical Services and Active Ingredients (PSAI) business generated revenues of Rs 643.4 crore for the quarter, down 23 percent YoY and 9 percent QoQ .
Other highlights
The company incurred a capex of Rs 250 crore during the quarter and generated a free cash flow of Rs 580 crore.
The net cash surplus at the end of the quarter stood at Rs 1,370 crore, while the net debt-to-equity ratio stood at 0.07.
The stock ended 1.03 percent lower at Rs 4,444.85 on the National Stock Exchange. It has traded flat over the year but has gained more than 4 percent over the month.
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