Dr. Reddy's Q4 Results: Profit Tanks 76% Despite Rise in Revenue

Dr. Reddy's Q4 Results
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Profit decline: Dr Reddy’s Laboratories has reported a sharp decline in its Net Profits to Rs 88 crore for the Jan-Mar quarter. Last year, in the quarter ending March, the company reported a net profit of Rs 362.4 crore. However, sequentially also the net profits declined from Rs 709.3 crore. Analysts had earlier estimated a profit of about Rs 560 crore.

It reported a 76 percent year-on-year decline in its consolidated net profit to Rs 88 crore, which was sharply below analysts' expectations of Rs 677 crore. The decline is driven by the impairment of non-current assets worth Rs 751.5 crore in Q4FY22

Increase in revenue: The revenue increased to Rs 5,437 crore, up 15% YoY. It was slightly lower than street estimates of Rs 5,240 crore. The revenue growth was driven by growth across all markets.

Segment Wise Growth: India's business saw a 15% YoY jump to Rs 968.9 crore while revenue from North America jumped to Rs 1,997 crore, an increase of 14% YoY. Revenues from Emerging markets came in at Rs 1,200 crore, which is an increase of 36% over last year. The revenue from Europe grew by 12% to Rs 444.4 crore.

EBITDA and margins: The Hyderabad-based firm reported Earnings before interest, tax, depreciation, and amortization (EBITDA) at Rs 1,298 crore in Q4FY22 compared to Rs 1,265.90 crore in the previous quarter. The EBITDA margin stood at 23.9% in Q4FY22 higher than 23.8% in Q4FY21.

Gross margins declined 80 bps YoY and 90 bps QoQ. The decline was primarily due to price erosion, and an increase in the inventory provisions which was partly offset by income from the divestment of non-core brands.

New product launch: During this quarter, the company launched 3 new products – Vasopressin Injection, Nicotine Lozenges Cherry Flavour (OTC), and Clobetasol Shampoo in Canada. For the full year, the company launched 17 products. During the year, they filed 7 new Abbreviated New Drug Applications (ANDAs) with the US Food and Drug Administration (USFDA). 

Dividend: The board has recommended a final dividend of Rs 30 per equity share for the financial year 2021-22. The dividend will be paid on or after five days from the date of declaration of the final dividend by the shareholders at the 38th Annual General Meeting (AGM).

Management Commentary: “We delivered healthy revenue growth, though the profits were impacted by impairment charges. In spite of multiple external challenges, our core businesses performed well driven by an increase in market share, some strong launches, and productivity improvement,” said GV Prasad, Co-Chairman & MD.

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