Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY |
NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated
financial results for the quarter ended Sep 30, 2023. The
information mentioned in this release is based on consolidated
financial statements under International Financial Reporting
Standards (IFRS).
Revenues
Rs. 68,802 Mn [Up: 9% YoY; Up: 2% QoQ]
Gross Margin
58.7% [Q2 FY23: 59.1%; Q1 FY24: 58.7%]
SG&A Expenses
Rs. 18,795 Mn [Up: 13% YoY; 6% QoQ]
R&D Expenses Rs. 5,447 Mn[7.9% of
Revenues]
EBITDA
Rs. 21,813 Mn [31.7% of Revenues]
Profit before Tax
Rs. 19,134 Mn [Up: 19% YoY; Up: 4% QoQ]
Profit after Tax
Rs. 14,800 Mn [Up: 33% YoY; Up: 6% QoQ]
Commenting on the results, Co-Chairman & MD, G V Prasad
said: “We delivered another quarter of strong results with
highest ever sales and profits, driven by market share gains &
momentum in our US generics business and robust growth in Europe.
We are continuing to strengthen our pipeline both organically and
through business development to drive growth and create
differentiation.”
All amounts in millions, except EPS All US dollar amounts based on
convenience translation rate of 1 USD = Rs. 83.08
Dr.
Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income
Statement
Particulars
Q2 FY24
Q2 FY23
YoY Gr %
Q1 FY24
QoQ Gr%
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Revenues
828
68,802
759
63,057
9
811
67,384
2
Cost of Revenues
342
28,434
311
25,810
10
335
27,831
2
Gross Profit
486
40,368
448
37,247
8
476
39,553
2
Operating Expenses
Selling, General & Administrative
expenses
226
18,795
199
16,560
13
213
17,702
6.2
Research and Development expenses
66
5,447
59
4,869
12
60
4,984
9
Impairment of non-current assets
1
55
0
25
120
0
11
400
Other operating (income)/expense
(22)
(1796)
(4)
(334)
438
(9)
(780)
130
Results from operating
activities
215
17,867
194
16,127
11
212
17,636
1
Net finance (income)/expense
(15)
(1225)
2
156
(885)
(9)
(784)
56
Share of profit of equity accounted
investees
(1)
(42)
(2)
(140)
(70)
(1)
(43)
(2)
Profit before income tax
230
19,134
194
16,111
19
222
18,463
4
Income tax expense
52
4,334
60
4983
(13)
53
4,438
(2)
Profit for the period
178
14,800
134
11,128
33
169
14,025
6
Diluted Earnings Per Share
(EPS)
1.07
88.78
0.81
66.89
33
1.01
84.22
5
As % to revenues
Q2 FY24
Q2 FY23
Q1 FY24
Gross Profit
58.7
59.1
58.7
SG&A
27.3
26.3
26.3
R&D
7.9
7.7
7.4
EBITDA
31.7
30.6
31.7
PBT
27.8
25.5
27.4
PAT
21.5
17.6
20.8
EBITDA Computation
Particulars
Q2 FY24
Q2 FY23
Q1 FY24
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Profit before Income Tax
230
19,134
194
16,111
222
18,463
Interest (income) / expense - Net*
(14)
(1,166)
1
61
(8)
(685)
Depreciation
29
2,437
25
2,107
27
2,281
Amortization
16
1,353
12
1,018
16
1,302
Impairment
0
55
0
25
0
11
EBITDA
262
21,813
233
19,322
257
21,372
* Includes income from Investments
All amounts in millions, except EPS All US dollar amounts based on
convenience translation rate of 1 USD = Rs. 83.08
Key Balance Sheet
Items
Particulars
As on 30th Sep 2023
As on 30th Jun 2023
As on 30th Sep 2022
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Cash and cash equivalents and other
investments
840
69,784
736
61,162
353
29,306
Trade receivables
839
69,722
928
77,095
927
76,987
Inventories
681
56,592
631
52,398
590
49,042
Property, plant, and equipment
848
70,478
809
67,207
768
63,817
Goodwill and Other Intangible assets
497
41,278
509
42,306
434
36,084
Loans and borrowings (current &
non-current)
159
13,230
151
12,520
208
17,289
Trade payables
367
30,485
333
27,682
274
22,778
Equity
3,046
2,53,086
2,952
2,45,259
2,482
2,06,225
Revenue Mix by Segment
Segment
Q2 FY24
Q2 FY23
YoY Gr %
Q1 FY24
QoQ Gr %
(Rs.)
(Rs.)
(Rs.)
Global Generics
61,084
55,946
9
60,083
2
North America
31,700
28,001
13
31,978
(1)
Europe
5,286
4,199
26
5,071
4
India
11,860
11,500
3
11,482
3
Emerging Markets
12,163
12,246
(1)
11,552
5
Pharmaceutical Services and Active
Ingredients (PSAI)
7,034
6,434
9
6,709
5
Others
684
677
1
592
15
Total
68,802
63,057
9
67,384
2
Revenue Analysis [Q2 FY24]
Global Generics (GG)
- Q2 FY24 revenue at Rs. 61.1 billion, YoY growth of 9%
and QoQ growth of 2%. This growth was primarily driven by North
America and Europe.
North America
- Q2 FY24 revenue at Rs. 31.7 billion, YoY growth of 13%
and QoQ decline of 1%. The growth was on account of growing
momentum in our core portfolio, Mayne integration, favorable move
from foreign exchange which was partly offset by price
erosion.
- During the quarter, we launched 4 new products in US.
- During the quarter, we filed 2 new Abbreviated New Drug
Applications (ANDAs) with the US Food and Drug Administration
(USFDA). As of 30th Sep 2023, cumulatively 79 generic filings are
pending for approval with the USFDA (75 ANDAs and 4 NDAs under
505(b)(2) route). Out of the pending 79 ANDAs, 41 are Para IVs, and
we believe 20 have ‘First to File’ status.
Europe
- Q2 FY24 revenue at Rs. 5.3 billion, YoY growth of 26%
and QoQ growth of 4%. The growth was driven by leveraging existing
portfolio, contribution from new products and favorable forex which
was partly offset by price erosion.
India
- Q2 FY24 revenue at Rs. 11.9 billion, YoY growth of 3%
and QoQ increase of 3%. This growth was largely driven by pricing,
new launches and partly offset by NLEM impact and muted demand due
to weak acute season. Excluding NLEM, operational sales grew in
mid-single digit.
Emerging Markets
- Q2 FY24 revenue from Emerging Markets at Rs. 12.2
billion, YoY decline of 1% and QoQ growth of 5%.
- Revenue from Russia for the quarter at Rs. 5.8 billion,
YoY decline of 3% and QoQ growth of 3%. YoY decline was majorly due
to currency devaluation, excluding which YoY growth of 4% and QoQ
growth of 9%. The increase was mainly driven by favorable
pricing.
- Revenue from other CIS countries and Romania for the
year at Rs. 2.2 billion, YoY growth of 1% and QoQ growth of 12%.
YoY growth, primarily on account of price increases on certain
products, favorable move from foreign exchange which was partly
offset by decline in base business volumes. QoQ growth was
primarily driven by base business demand, partly offset by pricing
pressure.
- Revenue from Rest of World (RoW) territories for the
year at Rs. 4.2 billion, YoY growth of 1% and QoQ growth of 6%. YoY
growth, led by new product launches, which was partly offset by
pricing pressure and lower base business. QoQ growth was mainly
driven by new product launches and increase in demand of existing
products and was partly offset by price erosion.
Pharmaceutical Services and Active
Ingredients (PSAI)
- Q2 FY24 revenue at Rs. 7.0 billion, with a growth of 9%
YoY and 5% QoQ. YoY growth was mainly driven by new product
launches, favorable move from foreign exchange partly offset with
price erosion. QoQ growth was mainly driven by new product
launches.
Income Statement Highlights:
- Q2 FY24 gross margin at 58.7% (GG: 63.6%, PSAI: 17.8%).
Gross margin decreased by ~40 bps YoY and was in line with
preceding quarter. The decline in gross margin was primarily driven
by marginal adverse price variance in certain products and mix
change offset with favorable forex benefit.
- Selling, general & administrative (SG&A) expenses
for Q2 FY24 at Rs. 18.8 billion, YoY increase of 13% and by 6%
QoQ. The YoY SG&A spend increase is largely on account of
investment in sales & marketing, digitalization, and other
business initiatives.
- Research & development (R&D) expenses in Q2 FY24
at Rs. 5.4 billion. As % to Revenues – Q2FY24: 7.9% | Q1FY24: 7.4%
| Q2 FY23: 7.7%. R&D investments are driven by ongoing clinical
trials on differentiated assets, as well as other developmental
efforts to build a healthy pipeline of new products across our
markets for both small molecules and biosimilars.
- Other operating income for Q2 FY24 at Rs. 1.8 billion
compared to Rs. 0.3 billion in Q2 FY23. Other operating income
included the one-off income benefit of ~ Rs. 0.98 billion pursuant
to settlement of product related litigation.
- Net Finance income for Q2 FY24 at Rs.1.2 billion
compared to net finance expense of Rs. 0.2 billion in Q2 FY23. The
higher income was primarily on account of profit on sale of units
of mutual funds and other investments.
- Profit before Tax for Q2 FY24 at Rs. 19.1 billion, YoY
growth of 19%. QoQ growth of 4%
- Profit after Tax for Q2 FY24 at Rs. 14.8 billion. The
effective tax rate for the quarter has been 22.7% as compared to
30.9% in Q2 FY23. The lower tax was primarily due to adoption of
corporate tax rate under section 115BAA of the Income Tax Act of
India.
- Diluted earnings per share for Q2 FY24 is Rs. 88.78
Other Highlights:
- EBITDA for Q2 FY24 at Rs. 21.8 billion and the EBITDA
margin is 31.7%.
- Capital expenditure for Q2 FY24 at Rs. 3.2 billion.
- Free cash-flow for Q2 FY24 at Rs. 14.5 billion (before
acquisition payout).
- Net cash surplus for the company at Rs. 59.1 billion as
on Sep 30, 2023.
All amounts in millions, except EPS
About key metrics and non-GAAP Financial Measures
This press release contains non-GAAP financial measures within
the meaning of Regulation G and Item 10(e) of Regulation S-K. Such
non-GAAP financial measures are measures of our historical
performance, financial position or cash flows that are adjusted to
exclude or include amounts from the most directly comparable
financial measure calculated and presented in accordance with
IFRS.
The presentation of this financial information is not intended
to be considered in isolation or as a substitute for, or superior
to, the financial information prepared and presented in accordance
with IFRS. Our non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles. These measures
may be different from non-GAAP financial measures used by other
companies, limiting their usefulness for comparison purposes.
We believe these non-GAAP financial measures provide investors
with useful supplemental information about the financial
performance of our business, enable comparison of financial results
between periods where certain items may vary independent of
business performance, and allow for greater transparency with
respect to key metrics used by management in operating our
business.
For more information on our non-GAAP financial measures and a
reconciliation of GAAP to non-GAAP measures, please refer to
"Reconciliation of GAAP to Non-GAAP
Results" table in this press release.
All amounts in millions, except EPS
Reconciliation of GAAP measures to non-GAAP measures
Free Cash Flow
Three months Ended Sep 30,
2023
Net cash generated from operating
activities
24,030
Less:
Taxes
(6102)
Investments in PPE and Intangibles
(3450)
Free Cash Flow before
acquisition
14,478
Less:
Acquisitions related pay-out
-
Free Cash Flow
14,478
Operating working capital
Quarter Ended Sep 30,
2023
Inventories
56,592
Trade Receivables
69,722
Less:
Trade Payables
(30,485)
Operating Working Capital
95,829
Net cash surplus
Quarter Ended Sep 30,
2023
Cash and cash equivalents
13,539
Investments
56,245
Short-term borrowings
(5,847)
Long-term borrowings, non-current
(6043)
Less:
Restricted cash balance – Unclaimed
dividend
89
Lease liabilities (included in Long-term
borrowings, non-current)
(2243)
Equity Investments
(Included in Investments)
988
Net Cash Surplus
59,060
All amounts in millions, except EPS
Computation of Return on Capital Employed
Year Ended Sep 30,
2023
Profit before tax
19,134
Less:
Interest and Investment Income
(Excluding forex gain/loss)
1,166
Earnings Before Interest and taxes
[A]
17,968
Average Capital Employed [B]
1,83,550
Return on Capital Employed (A/B)
(Ratio)
38.9%
Computation of capital employed.
Year Ended Sep 30,
2023
Year Ended Mar 31,
2023
Property Plant and Equipment
70,478
66,462
Intangibles
37,055
30,849
Goodwill
4,223
4,245
Investment in equity accounted
associates
4,069
4,702
Other Current Assets
22,423
20,069
Other investments
1,855
660
Other non-current assets
812
800
Inventories
56,592
48,670
Trade Receivables
69,722
72,485
Derivative Financial Instruments
189
1,095
Less:
Other Liabilities
40,297
42,320
Provisions
5,298
5,513
Trade payables
30,485
26,444
Operating Capital Employed
1,91,341
1,75,760
Average Capital Employed
1,83,550
Computation of EBITDA
Refer page no. 2 for EBITDA computations.
Earnings Call Details (07:30 pm IST, 10:00 am EDT, Oct 27,
2023)
The management of the Company will host an Earnings call to
discuss the Company’s financial performance and answer any
questions from the participants.
Conference Joining Information
Option 1: Express Join with
DiamondPass™
Pre-register with the below link and join without waiting for
the operator.
https://services.choruscall.in/DiamondPassRegistration/register?confirmationNumber=7967211&linkSecurityString=2c6ede051b
Option 2: Join through below Dial-In
Numbers
Universal Access Number:
+91 22 6280 1219
+91 22 7115 8120
International Toll-Free Number:
USA: 1 866 746 2133
UK: 0 808 101 1573
Singapore: 800 101 2045
Hong Kong: 800 964 448
No password/pin number is necessary to dial in to any of the
above numbers. The operator will provide instructions on asking
questions before and during the call.
Play Back: The play back will be available after the
earnings call, till Nov 3rd, 2023. For play back dial in phone No:
+91 22 7194 5757, and Playback Code is 02796.
Transcript: Transcript of the Earnings call will be
available on the Company’s website: www.drreddys.com
About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (BSE:
500124, NSE: DRREDDY, NYSE: RDY, NSEIFSC: DRREDDY) is a global
pharmaceutical company headquartered in Hyderabad, India.
Established in 1984, we are committed to providing access to
affordable and innovative medicines. Driven by our purpose of ‘Good
Health Can’t Wait’, we offer a portfolio of products and services
including APIs, generics, branded generics, biosimilars and OTC.
Our major therapeutic areas of focus are gastrointestinal,
cardiovascular, diabetology, oncology, pain management and
dermatology. Our major markets include – USA, India, Russia &
CIS countries, China, Brazil, and Europe. As a company with a
history of deep science that has led to several industry firsts, we
continue to plan and invest in businesses of the future. As an
early adopter of sustainability and ESG actions, we released our
first Sustainability Report in 2004. Our current ESG goals aim to
set the bar high in environmental stewardship; access and
affordability for patients; diversity; and governance. For more
information, log on to: www.drreddys.com.
Disclaimer: This press release may include statements of
future expectations and other forward-looking statements that are
based on the management’s current views and assumptions and involve
known or unknown risks and uncertainties that could cause actual
results, performance or events to differ materially from those
expressed or implied in such statements. In addition to statements
which are forward-looking by reason of context, the words "may",
"will", "should", "expects", "plans", "intends", "anticipates",
"believes", "estimates", "predicts", "potential", or "continue" and
similar expressions identify forward-looking statements. Actual
results, performance or events may differ materially from those in
such statements due to without limitation, (i) general economic
conditions such as performance of financial markets, credit
defaults , currency exchange rates , interest rates , persistency
levels and frequency / severity of insured loss events (ii)
mortality and morbidity levels and trends, (iii) changing levels of
competition and general competitive factors, (iv) changes in laws
and regulations and in the policies of central banks and/or
governments, (v) the impact of acquisitions or reorganization ,
including related integration issues, and (vi) the susceptibility
of our industry and the markets addressed by our, and our
customers’, products and services to economic downturns as a result
of natural disasters, epidemics, pandemics or other widespread
illness, including coronavirus (or COVID-19), and (vii) other risks
and uncertainties identified in our public filings with the
Securities and Exchange Commission, including those listed under
the "Risk Factors" and "Forward-Looking Statements" sections of our
Annual Report on Form 20-F for the year ended March 31, 2022. The
company assumes no obligation to update any information contained
herein.” The company assumes no obligation to update any
information contained herein.
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version on businesswire.com: https://www.businesswire.com/news/home/20231027733976/en/
INVESTOR RELATIONS RICHA PERIWAL
richaperiwal@drreddys.com
MEDIA RELATIONS USHA IYER ushaiyer@drreddys.com
Dr Reddys Laboratories (NYSE:RDY)
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