Dr. Reddy’s Laboratories Q2 FY27 Earnings Review

Financial Performance Overview Dr. Reddy's Laboratories delivered a mixed performance for Q2 FY27, marked by year-over-year (YoY) contractions but exceeding market consensus. The company reported a 36% YoY decline in net profit to ₹913.4 crore. Consolidated revenue experienced a slight YoY decrease of 1.5% to ₹8,671 crore, although it posted a 7% quarter-on-quarter (QoQ) recovery. Both the top and bottom lines comfortably surpassed CNBC-TV18 poll estimates. Earnings before interest, tax, depreciation, and amortization (EBITDA) contracted 24.2% YoY to ₹1,783 crore. Consequently, the EBITDA margin compressed to 20.6% from 26.7% in the corresponding quarter last year, though it still outperformed street estimates. Segmental HighlightsNorth America: Revenue fell 23% YoY to ₹2,490 crore. This contraction was primarily driven by lower sales of the key drug lenalidomide. Despite this, the company launched six new products and filed five new Abbreviated New Drug Applications (ANDAs) during the quarter. India: The domestic market served as a primary growth engine, with revenue surging 17% YoY to ₹1,850 crore. Performance was bolstered by volume expansion, price adjustments, new brand introductions, and contributions from recently acquired portfolios. Emerging Markets: Revenue grew a robust 24% YoY to ₹2,060 crore. This was supported by new product rollouts across target countries and favorable foreign exchange dynamics. Europe: Revenue saw a marginal 1% YoY increase to ₹1,390 crore. Pricing pressures in the generics space were partially mitigated by new generic product launches and favorable currency movements. PSAI (Pharmaceutical Services and Active Ingredients): Revenue declined 12% YoY to ₹830 crore. Lower volume uptake in the API business was the main detractor, partially offset by double-digit growth in the CDMO division.