Dr. Reddy’s Laboratories (DRREDDY) Q1 24/25 earnings summary

Executive summary

• Q1FY25 revenue reached a record ₹7,673 Cr, up 14% YoY and 8% QoQ, with growth led by North America and India.

• EBITDA was ₹2,160 Cr with a 28.2% margin; annualized ROCE was 33%.

• Net cash surplus was ₹6,731 Cr ($808 million) as of June 30, 2024.

• Strategic developments included the Nicotinell® acquisition, a nutraceuticals JV with Nestlé India, and a proposed 5-for-1 stock split.

Financial highlights

• Consolidated revenue was ₹7,673 Cr, up 14% YoY and 8% QoQ; EBITDA was ₹2,160 Cr, up 1% YoY and 15% QoQ.

• PAT was ₹1,392 Cr, up 17% QoQ; diluted EPS was ₹83.5.

• Gross margin was 60.4%, up 170 bps YoY and 183 bps QoQ, mainly due to favorable product mix.

• Operating working capital was ₹11,555 Cr as of June 30, 2024; free cash flow was ₹227 Cr.

• Capital expenditure was ₹491 Cr for the quarter.

Outlook and guidance

• Full-year SG&A guidance was 27.5%-28% of sales; R&D investment was projected at 8.5%-9% of sales and the effective tax rate at 24%-25%.

• North America and India were expected to continue double-digit growth, supported by launches and acquisitions.

• The Nestlé India nutraceuticals JV was expected to become operational in Q2FY25; Nicotinell® was expected to close in early Q4 CY2024 (early Q3FY25).