Dr. Reddy’s Q3 Review - Cost Base Increases; Valuations Attractive: ICICI Securities

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ICICI Securities Report

Dr. Reddy’s Laboratories Ltd.’s reported Q3 FY21 performance below our estimates at the Ebitda margin level due to increased costs.

Revenue grew 12.5% YoY to Rs 49.3 billion (our estimate Rs 50.0 billion) driven by India, Europe and Rest of World markets.

Ebitda margin at 22.8% was lower than estimated 24.0% despite recognition of $12 million milestone income.

Adjusted profit after tax grew 17.9% to Rs 6.2 billion (our estimate Rs 6.2 billion).

U.S. declined 4.9% QoQ to approximately $235 million due to pricing pressure in some key products.

India revenue grew 25.6% YoY aided by acquisition of Wockhardt’s portfolio (June 2020).

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