Dr. Reddy’s Limited is expected to declare a year-on-year growth of 20-24 percent in its consolidated profit after tax (PAT) for the quarter ended March 2022. Experts expect the consolidated revenues to rise by 11-12 percent on-year.
On a sequential basis, the company's PAT is expected to decline 5 percent and revenues are expected to stay flat.
The average of estimates from four brokerages that Moneycontrol spoke to pegs the consolidated PAT at Rs 672 crore on consolidated revenues of Rs 5,240 crore.
The Hyderabad-based pharmaceutical major had reported a consolidated PAT of Rs 553.5 crore during the corresponding period of previous year when it had generated revenue of Rs 4,728 crore.
The company had recorded a PAT of Rs 706.5 crore during the October – December period on a revenue of Rs 5,312 crore.
The profit for the full year period of April–March 2022 stood at Rs 1,915 crore, while the revenue for FY21 came in at Rs 18,972 crore.
Brokerage views
Brokerages expect strong traction in the company’s domestic business on a yearly basis and expect the US business to grow sequentially. However, the ongoing geo-political crisis is likely to impact the Russia business in a big way.
“We expect North America sales to increase 3 percent QoQ to $255 million and forecast healthy 13 percent YoY domestic growth Q4FY22”, a report from Kotak Institutional Equities said. Owing to currency depreciation and likely lower volumes, it forecast 20 percent YoY decline in Russia sales during the quarter but builds strong ROW growth and steady growth in Europe in Q4FY22.
The brokerage firm Phillip Capital on the other hand estimate 9 percent rise in sales led by 8 percent growth in US sales to $255 million (supported by gRevlimid in Canada), 11 percent rise in domestic sale despite challenging US pricing environment and Russian trade challenges.
According to a report from Motilal Oswal Financial Services, it “expect the US sales to grow 15 percent YoY to $ 270 million, driven by ramp-up in key complex products and India revenue to grow 35 percent YoY on better traction in the Chronic segment post-COVID and low base of past year”.
EBITDA (earnings before interest, tax, depreciation and amortization) margins are expected to come under pressure due to elevated costs and pressure in Russia/Ukraine markets.
EBITDA margin are likely in the range of 20.4 – 20.6 percent. However, Motilal Oswal optimistically forecasts the EBITDA margins to increase to 23.1 percent.
Broker estimates
Kotak Institutional Equities forecasts the PAT at Rs 661 crore for the quarter with revenues at Rs 5,118 crore. EBITDA margin is likely at 20.6 percent.
Phillip Capital on the other hand pegs the PAT at Rs 579 crore on revenues of Rs 5,139 crore. It estimates an EBITDA margin of 20.4 percent for the quarter.
The research firm, Edelweiss Research, estimates the PAT of Rs 684 crore and revenue of Rs 5,172 crore. The EBITDA margin at 22.3 percent are aided by reduction in SG&A (selling, general and administrative) expenses.
Motilal Oswal has the most optimistic estimates as it pegs the PAT at Rs 767 crore on the YoY growth of 16.8 percent in revenues at Rs 5,522 crore. It sees the EBITDA margins improving on a YoY and sequential basis to 23.1 percent.
Dr Reddy’s ended Rs 1.80 higher at Rs 3,905.8 on May 18, at The National Stock Exchange. The stock has lost 25 percent in the past one year and is down 9 percent in the past one month.
Disclaimer: The views and investment tips of investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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