Dr Reddy's Labs advances 4%, hits a record high on healthy Q1 numbers

Shares of Dr Reddy’s Laboratories hit a record high of Rs 4,224, up 4 per cent on the BSE on Wednesday after the company reported a better-than-expected net profit of Rs 579 crore in April-June quarter (Q1FY21), on the back of strong revenue growth. The pharmaceutical company had posted a profit of Rs 663 crore in the year-ago period. The stock surpassed its previous high of Rs 4189.35, touched on June 10, 2020.

The company’s consolidated revenues rose 15 per cent to Rs 4,418 crore, mainly due to growth in US formulations driven by currency tailwinds and strong traction from PSAI (pharmaceutical services and active Ingredients) segment on a lower base.

Dr Reddy’s North American Generics (NAG) business reported a 6 per cent year-on-year (YoY) growth in revenues at Rs 1,728 crore, while Europe posted 48 per cent YoY increase at Rs 355 crore. Its sales, however, got impacted in the domestic market, down 10 per cent YoY, due to the Covid-19 pandemic.

The company said the overall growth in global generics was on account of volume traction in the base business, new product launches, and was aided by favorable forex rates; however, it was partially offset due to price erosion.

Analysts on an average had expected a profit of Rs 496 crore on revenues of Rs 4,170 crore for the quarter.

EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin declined to 26.3 per cent from 29.5 per cent in the previous year quarter. However, it improved sequentially from 22.6 per cent in the March quarter of the fiscal year 2019-20 (Q4FY20).

The management said, while the sales volume were impacted in some of the markets due to lower prescriptions generated and fall in patient footfalls in pharmacies/ clinics due to Covid-19, the pricing environment was relatively stable, new product launches continued and depreciation of rupee against the US dollar and Euro supported the business.

At 01:58 pm, the stock was trading 3.8 per cent higher at Rs 4,218 on the BSE, as compared to a 0.67 per cent rise in the S&P BSE Sensex. The trading volumes on the counter nearly doubled with a combined 2.3 million shares changing hands on the NSE and BSE.