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Dr Reddy’s Q2 Results Preview: Revenue expected to increase 4-5%, PAT to decline 15%

Kotak Institutional Equities expects North America business (including Canada) to increase by $11 million q-o-q to $246 million, and forecasts 25% y-o-y growth in India from recovery in acute segment and contribution from Sputnik vaccine.

October 29, 2021 / 07:59 AM IST
 
 
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Dr Reddy’s Laboratories, one of the top players in the Indian pharmaceutical industry with strong presence in overseas markets, will be declaring its results on October 29 for the quarter ended September.

It may be noted that for the same period last year,  it had reported consolidated revenues of Rs 4,897 crore and a PAT of Rs 762 crore (with an extraordinary item of Rs 78 crore, the adjusted profit is Rs 840 crore). During the previous quarter, the company clocked revenue of Rs 4,919 crore with a PAT of Rs 571 crore.

In the current quarter, experts expect the company’s revenue to grow ~5% year-on-year (y-o-y) and ~4% sequentially.

PAT is expected to decline by ~15% y-o-y and increase by ~20% sequentially.

Edelweiss Research

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Edelweiss Research expects revenue to grow Rs 5,096 crore, which is 4% y-o-y and 3.6% sequentially.

The brokerage expects North America revenue (~$244 million) to increase 4% sequentially, on the back of new launches in Canada and market-share gain in existing products, which will be partly offset by price erosion and competition.

It said, “We expect India to grow at mere 1%YoY due to high base on account of Remdesivir sales (expect core portfolio to grow at 20%).”

EBITDA is expected to decline to  Rs 1,121 crore, falling 8.2% y-o-y and growing 24.2% sequentially.

The brokerage expects “EBITDA margins to improve 365bps q-o-q to 22%, however decline 295bps y-o-y as most of the costs have been rolled back and India investments continue.”

It estimates a PAT of Rs 694 crore.

Kotak Institutional Equities

Kotak Institutional Equities in its report says, “We expect North America business (including Canada) to increase US$11 million q-o-q to US$246 million led by launch of Revlimid in Canada and higher contribution from Kuvan powder.”

It forecasts 25% y-o-y growth in India, from recovery in acute segment and contribution from Sputnik vaccine. Russia is expected to remain flat y-o-y, the Rest of World to grow at 35% y-o-y on a low base, and EU to grow 15% y-o-y.

It expects revenues to increase to Rs 5,158 crore, rising by 5.3% y-o-y  and by 4.8% on a sequential basis from Rs 4,919 crore.

EBITDA is expected to decline by 8.7% y-o-y to Rs 1,115 crore, from Rs 1,222 crore last year; and to improve 23.5% sequentially from Rs 903 crore.

On the margins, the brokerage says, “We expect gross margin to improve 130 bps q-o-q reflecting high-margin US/Canada launches and expect EBITDA margin to improve 330 bps q-o-q to 21.6% despite marketing spend in India benefitting from operating leverage.”

It expects a PAT of Rs 719 crore, a decline of 14.5% from last year’s adjusted PAT of Rs 840 crore; and a growth of 26% from last quarter's Rs 571 crore.

BOB Caps

BOB Caps in its report expects a y-o-y growth of 6.5% and q-o-q growth of 6% in revenue to Rs 5,216 crore, on the back of strong growth in domestic business and healthy Europe/ROW sales. It expects price erosion to continue to put pressure on US revenue.

It estimates an EBITDA of Rs 1,116 crore, down 8.6% on a yearly basis and up 23.7% sequentially. Therefore, EBITDA margins are expected to be 21.4%, down 355 bps y-o-y and higher by 305 bps sequentially. The margins are lower this quarter because of fewer export-led opportunities amid COVID-19 and a high base.

It expects PAT to decline 20% y-o-y to Rs 673 crore, to grow 18% sequentially.

The stock closed at Rs 4,569.95 on Thursday, down Rs 92.75 (-1.99%) from its previous day's close. This year the stock is trading below its last year’s levels, down 7.7% over last one year, down 12.2% this financial year and down 5% in last one month.



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first published: Oct 29, 2021 07:59 am
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