Dr. Reddy’s Laboratories (DRREDDY) Q1 26/27 earnings summary

Executive summary

• Revenue declined 5.6%–6% year-over-year to INR 8,071 crore (₹80.7 billion), but grew 7% sequentially, mainly due to lower lenalidomide sales and a provision for semaglutide API-related issues.

• Base business excluding lenalidomide showed healthy double-digit growth across all key geographies, supported by new launches and favorable currency movements.

• EBITDA margin was 12.5%, impacted by semaglutide provision and Middle East conflict; excluding these, margin would have been 15.4%.

• Strategic focus remains on strengthening base business, expanding in peptides, biosimilars, consumer health, and innovation.

• Celebrated 25 years of NYSE listing and recognized among the world's most sustainable companies.

Financial highlights

• Consolidated gross profit margin was 46.5%, down 1,039 bps YoY, but up 169 bps sequentially; excluding semaglutide API impact, 49.4%.

• EBITDA was INR 1,009 crore (₹10.1 billion), margin 12.5%; profit before tax was INR 553 crore (₹5.5 billion), margin of 6.8%.

• Profit after tax attributable to equity holders was INR 443 crore (₹4.4 billion), margin of 5%.

• Net cash surplus stood at INR 3,057–3,058 crore (₹30.6 billion) as of June 30, 2026.

• ROCE at 5.3%; excluding semaglutide API impact, ROCE at 8%.

Outlook and guidance

• Management maintains guidance for EBITDA margins near 20% (excluding semaglutide), expecting improvement as semaglutide supplies resume.

• Double-digit base business growth and steady margin improvement expected in the second half of the fiscal.

• R&D spend expected to be 7–8% of revenue for the year; tax rate guided at 24–25%.

• CapEx for FY27 guided at INR 1,800 crore, down from previous years.

• Focus on operational excellence, pipeline development, and augmenting organic growth with M&A.