Dr. Reddy’s Q2 net slips to ₹1,342 cr. on record sales

Dr. Reddy’s Laboratories consolidated net profit declined 9.5% for the September quarter to ₹1,341.9 crore compared to ₹1,482.2 crore in the year earlier period even as the generic drugmaker reported revenue from operations raced past ₹8,000 crore for the first time.

One offs such as acquisition costs pertaining to Nicotinell portfolio in Europe, change in government land tax, minority interest in Nestle and impairment were cited as factors for the drop by Dr. Reddy’s. Net profit on a sequential basis was nearly 4% lower, according to the results prepared as per the Indian Accounting Standards (Ind AS).

Total revenue from operations increased more than 16% to ₹8,038.2 crore (₹6,902.6 crore). For the June quarter, the company had reported ₹7,696.1 crore. Year on year growth was broad based, driven by improved sales volumes and new product launches, while sequential growth was primarily driven by Emerging Markets and Europe. On Tuesday, Dr. Reddy’s shares closed flat at ₹1,272.55 apiece on the BSE.

“We delivered another good quarter and maintained the growth momentum across businesses... made progress on our future growth drivers, operationalised our venture with Nestle and completed the acquisition of Nicotinell and related brands,” co-chairman and MD G.V.Prasad said.

In the all important North America market, revenue increased YoY and declined on a sequential basis. The YoY growth was largely on account of increase in sales volumes, partly offset by price erosion, while sequential decline was due to decrease in sales volumes, the company said.

A positive in North America market was price erosion dropping to single digit, CFO M.V.Narasimham told media.

₹600 cr. investment in arm

In a filing, the company said the Board has approved upto ₹600 crore fund infusion in Dr. Reddy’s Laboratories LLC, Russia, a step-down wholly-owned subsidiary, by way of investment in the equity shares. The fund will be used for working capital requirements.