Dr. Reddy’s Laboratories (DRREDDY) Q1 25/26 earnings summary

Executive summary

• Q1 FY26 delivered 11% year-over-year revenue growth to ₹85.5 billion, with consolidated revenues at INR 8,545 crore ($997 million), driven by broad-based growth and NRT portfolio contributions.

• EBITDA margin reached 26.7%, with EBITDA of ₹22.8 billion, up 5% year-over-year, and net cash surplus at ₹29.2 billion ($341 million).

• Strategic focus on consumer health, innovative therapies, biosimilars, and operational efficiency, with key pipeline advances in Semaglutide and Abatacept.

• Business momentum was driven by NRT and branded markets, offsetting softness and price erosion in U.S. generics.

• Collaborations with Alvotech for pembrolizumab and Sanofi for Beyfortus, and completion of NRT integration in Nordics and UK.

Financial highlights

• Gross margin was 56.9%, down 350 bps year-over-year but up 134 bps sequentially, mainly due to price erosion in generics.

• EBITDA stood at ₹22.8 billion (INR 2,278 crore), up 5% year-over-year, down 8% sequentially.

• Profit after tax attributable to equity holders was ₹14.2 billion (INR 1,419 crore), up 2% year-over-year, down 11% sequentially.

• Diluted EPS for the quarter was ₹17.04.

• Free cash flow generated was ₹4.5 billion (INR 433 crore).

Outlook and guidance

• Management expects intensified pricing pressure on Lenalidomide in the U.S. generics market.

• R&D investments projected at 7%-7.5% of sales for the full fiscal year.

• SG&A expected to be in the 28%-30% of sales range for the year.

• Semaglutide launch in Canada targeted for early 2026, with broader launches post-March 2026; biosimilar Abatacept phase 3 readout expected November 2025.

• Focus remains on strengthening base business, delivering pipeline assets, and improving productivity.