Dr reddy

Dr. Reddy’s Laboratories – Q1 FY26 Earnings Concall: Key Highlights 1. Financial Performance: - Consolidated revenue at ₹8,545 cr ($997 mn), up 11% YoY, flat QoQ. - EBITDA: ₹2,278 cr ($266 mn), +5% YoY, but declined 8% QoQ; margin at 26.7% (down 149 bps YoY, 243 bps QoQ). - Gross margin at 56.9%, down 350 bps YoY mainly due to US generics price erosion (notably Lenalidomide) and lower operating leverage; up 134 bps QoQ. - PAT of ₹1,419 cr ($166 mn), +2% YoY, -11% QoQ; diluted EPS ₹17.04. - SG&A at 30% of sales (₹2,565 cr), up 13% YoY due to investments in Consumer Healthcare (NRT) and Nestlé JV. - R&D expense steady at ₹624 cr (7.3% of sales); FY26 guidance 7–7.5%. - Capex at ₹683 cr; FY26 expected ₹2,500–2,700 cr focused on peptides and biosimilars. - Free cash flow ₹433 cr; net cash surplus ₹2,922 cr as of June 2025. 2. Segment Performance: - North America Generics: Revenue at $400 mn, down 17% YoY and 4% QoQ due to price erosion (especially Lenalidomide) and customer procurement timing. - New product launches (5) expected to accelerate in H2 FY26. Semaglutide approval targeted Oct–Nov 2025; launch aligned with exclusivity loss Jan 2026. Semaglutide expected to drive margin and EBITDA improvement. - Europe Generics: Revenue €131 mn, up 124% YoY, down 6% QoQ. Growth driven by NRT acquisition integration and new product launches. - Emerging Markets: Revenue ₹1,404 cr, +10% YoY, flat QoQ; Russia growth 17% YoY is a potential opportunity despite sanctions. - India: Revenue ₹1,471 cr, +11% YoY, +13% QoQ; outperformed IPM with 9.2% MAT growth. Focus on innovative products alongside branded generics. - PSAI (Pharma Services & Active Ingredients): Revenue $95 mn, +4% YoY, -14% QoQ; margins pressured by overhead under-recovery. Aurigene CDMO sales $17–18 mn in Q1; FY26 target $100 mn.