Healthcare firm Dr Reddy's Laboratories Q3FY14 earnings exceeded street estimates on every parameter with net profit growing over 70 percent compared to same quarter last year. Net sales grew 23.3 percent year-on-year to Rs 3,533.76 crore in the quarter ended December 2013 driven by global generics. In an interview to CNBC-TV18, Ranjit Kapadia, Sr. VP - Pharma at Centrum Broking Ltd and Sarabjit Kaur Nangra of Angel Broking analysed these numbers.
Below is the edited transcript of Ranjit Kapadia and Sarabjit Kaur Nangra’s interview with CNBC-TV18’s Ekta Batra and Sumaira Abidi. For the complete interview watch the video.
Ekta: Is there any exceptional which has come out with the Dr Reddy’s Laboratories numbers because margins have come in at a whopping 24.5 percent and profitability at Rs 618 crore?
Kapadia: I have not seen the detail numbers, but I don’t think any exceptional item is there. The 23 percent topline growth and margin improvement has driven the bottomline growth of almost 70 percent, which is a very good. The stock should move up in with this.
Ekta: What would your estimates be on the margins?
Kapadia: My margin estimate was very low at 13.7 percent.
Ekta: What has led to this big beat in the margins according to you?
Kapadia: The pharmaceutical services and active ingredients (PSAI) business must have done well. Last quarter it was very low. We had assumed a lower margin. That might have done well, which has improved the margin dramatically.
Sumaira: What is your first take?
Nangra: The numbers have been broadly in line with our expectation. Only net profit has come in a bit lower than what we were expecting. We were expecting around Rs 770 crore. Sales and margins have been more or less in line.
Ekta: What are your thoughts on both of these territories, North America up 76 percent and emerging markets up 25 percent?
Nangra: We were expecting good traction in both the markets. Russia and America have been key drivers for the company for a pretty long time. We expected good numbers to come in there. Domestic market revenue should be watched on Dr Reddy’s Laboratories.
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