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

Executive summary

• Achieved double-digit revenue growth of 14% year-over-year and 8% sequentially in Q1 FY25, with highest-ever quarterly revenues, driven by strong generics growth in North America and India.

• EBITDA margin stood at 28.2%, with annualized ROCE at 33% and net cash surplus of $808 million (₹67.3 billion) as of June 30, 2024.

• Board approved a 5-for-1 stock split, subject to shareholder approval.

• Strategic acquisitions and collaborations, including Nicotinell (NRT) portfolio from Haleon and a nutraceuticals JV with Nestlé India, are set to strengthen consumer healthcare and biosimilars.

• Profit after tax for Q1FY25 was ₹13.9 billion, a 1% YoY decline but a 7% sequential increase.

Financial highlights

• Consolidated revenues reached ₹76.7 billion (INR 7,673 crore/$921 million), up 14% year-over-year and 8% sequentially.

• Gross profit margin improved to 60.4%, up 170 bps year-over-year and 183 bps sequentially.

• EBITDA was ₹21.6 billion (INR 2,160 crore/$259 million), up 15% sequentially and 1% year-over-year.

• Profit after tax stood at ₹13.9 billion (INR 1,392 crore/$167 million), with EPS at ₹83.5.

• Free cash flow for the quarter was ₹2.3 billion (INR 227 crore/$27 million), with operating working capital at ₹115.5 billion.

Outlook and guidance

• SG&A expected to be 27.5%-28% of sales for the full fiscal year.

• R&D investment projected at 8.5%-9% of sales for the year.

• Effective tax rate anticipated at 24%-26% for the fiscal.

• North America and India businesses expected to continue double-digit growth, with new launches and acquisitions fueling momentum.

• Nicotinell® acquisition expected to close in early Q4 2024, with phased integration through February 2026; Nestlé JV to become operational in Q2FY25.