Dr. Reddy’s Laboratories (DRREDDY) Q2 25/26 earnings summary

Executive summary

• Q2FY26 revenue grew 9.8% year-over-year and 3% sequentially, reaching ₹88.1 billion, with broad-based growth across markets except North America, which faced price erosion and lower Lenalidomide sales.

• Profit after tax attributable to equity holders was ₹14.4 billion, up 14% year-over-year and 1% sequentially.

• Strategic acquisitions, including the NRT and Stugeron portfolios, and new product launches in India, APAC, and EMEA supported growth.

• Continued focus on innovation, biosimilars, and consumer healthcare, with key regulatory progress in multiple regions.

• ESG achievements included maintaining MSCI ESG rating 'A', improved Sustainalytics risk rating, and LEED Platinum certification for Srikakulam facility.

Financial highlights

• Consolidated revenue for Q2FY26 was ₹88.1 billion (₹8,805 crore), up 9.8% year-over-year and 3% sequentially.

• EBITDA was ₹23.5 billion (₹2,351 crore), with a margin of 26.7%, up 3% year-over-year and sequentially.

• Gross margin was 54.7%, down 492 bps year-over-year, mainly due to lower Lenalidomide sales and price erosion in North America.

• Diluted EPS for Q2FY26 was ₹17.25.

• Net cash surplus as of September 30, 2025, was ₹27.5 billion (₹2,751 crore).

Outlook and guidance

• Management is focused on strengthening core businesses, advancing pipeline assets, and driving operational efficiencies.

• Confident in maintaining double-digit growth in ex-US markets over the next 1-2 years, supported by new launches and innovation.

• Commitment to restoring EBITDA margins to 25%+ in the next two years, with growth levers including semaglutide, abatacept, and business development.

• Emphasis on augmenting organic growth with M&A and in-licensing, and maintaining quality, compliance, and sustainability.