Dr. Reddy’s Laboratories (DRREDDY) Q2 24/25 earnings summary

Executive summary

• Achieved record quarterly sales and operating profits in Q2 FY25, with consolidated revenues of ₹80.2 billion, up 17% YoY, driven by broad-based growth across all markets and healthy operating margins.

• Completed the acquisition of Haleon's global Nicotine Replacement Therapy (NRT) portfolio (ex-US) for an upfront payment of GBP 458 million (₹51,407 million), with phased integration planned through early 2026.

• Operationalized the nutraceuticals JV with Nestlé India, with a 51:49 shareholding, integrating nutraceuticals and supplements businesses.

• Executed a five-for-one stock split following board and shareholder approval, effective October 28, 2024.

• H1FY25 revenues reached ₹156.9 billion, a 15% YoY increase, with broad-based growth across all major markets.

Financial highlights

• Q2FY25 consolidated revenues were ₹8,016 crores ($957 million)/₹80.2 billion, up 17% YoY and 4% sequentially.

• Gross profit margin at 59.6%, up 92 bps YoY; Q2FY25 gross profit was ₹47.8 billion, up 18% YoY.

• SG&A spend was ₹2,301 crores ($275 million), up 22% YoY, with one-time acquisition costs; R&D spend at ₹727 crores ($87 million), up 33% YoY.

• Q2FY25 EBITDA was ₹2,280 crores ($272 million)/₹22.8 billion (28.4% margin), up 5% YoY.

• Q2FY25 profit before tax was ₹1,917 crores ($229 million)/₹19.2 billion; PAT before minority interest at ₹1,342 crores ($160 million)/₹13.4 billion, PAT margin at 16.7%.

• Q2FY25 EPS was ₹13.04/₹15.04, restated for the stock split and after non-controlling interest.

Outlook and guidance

• SG&A expected at 27.5%-28% of sales for FY25; R&D investment to remain in the 8.5%-9% range.

• Normalized effective tax rate projected around 25% for the fiscal year.

• Management expects continued growth in global generics, with focus on new product launches, market expansion, and further expansion in biosimilars and peptides.

• Integration of the NRT business and nutraceutical JV expected to drive future growth.