Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY |
NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated
financial results for the quarter and nine months ended December
31, 2023. The information mentioned in this release is based on
consolidated financial statements under International Financial
Reporting Standards (IFRS).
Q3FY24 9MFY24 Revenues Rs. 72,148
Mn[Up: 7% YoY; Up: 5% QoQ]
Rs. 208,334 Mn[Up: 14% YoY;
Up]
Gross Margin 58.5%[Q3FY23: 59.2%; Q2FY24:
58.7%]
58.6%[9M FY23: 56.5%]
SG&A Expenses
Rs. 20,228 Mn[Up: 12% YoY; 8% QoQ]
Rs. 56,725 Mn[Up:
13% YoY]
R&D Expenses Rs. 5,565 Mn[7.7% of
Revenues]
Rs. 15,996 Mn[7.7% of Revenues]
EBITDA Rs. 21,107 Mn[29.3% of Revenues]
Rs. 64,278
Mn[30.9% of Revenues]
Profit before Tax Rs.
18,257 Mn[Up: 12% YoY; Down: 5% QoQ]
Rs. 55,854 Mn[Up:
19% YoY]
Profit after Tax Rs. 13,789 Mn[Up:
11% YoY; Down: 7% QoQ]
Rs. 42,614 Mn[Up: 20% YoY]
Commenting on the results, Co-Chairman & MD, G V Prasad
said: “We delivered another quarter of highest-ever sales and
robust financial performance aided by new products performance and
base business market share gain in the U.S., new products launch
momentum and strong performance in Europe. We continue to
strengthen our core businesses and invest in innovative products
including strategic collaborations for novel molecules to meet
unmet needs of patients.”
All amounts in millions, except EPS All US dollar amounts based
on convenience translation rate of 1 USD = Rs. 83.19
Dr. Reddy’s Laboratories Limited & Subsidiaries
Revenue Mix by Segment [Q3FY24]
Particulars
Q3FY24
Q3FY23
YoY
Q2FY24
QoQ
(Rs.)
(Rs.)
Gr %
(Rs.)
Gr%
Global Generics
63,095
59,241
7%
61,084
3%
North America
33,492
30,567
9%
31,700
5%
Europe
4,970
4,303
15%
5,286
-6%
India
11,800
11,274
5%
11,860
-1%
Emerging Markets
12,833
13,097
-2%
12,163
6%
Pharmaceutical Services and Active
Ingredients (PSAI)
7,839
7,758
1%
7,034
11%
Others
1,214
701
73%
684
78%
Total
72,148
67,700
7%
68,802
5%
Revenue Mix by Segment [9M
FY24]
Particulars
9MFY24
9MFY23
YoY
(Rs.)
(Rs.)
Gr%
Global Generics
184,262
159,511
16%
North America
97,245
76,383
27%
Europe
15,326
12,644
21%
India
35,141
36,113^
-3%
Emerging Markets
36,550
34,371
6%
Pharmaceutical Services and Active
Ingredients (PSAI)
21,582
21,282
1%
Others
2,490
2,119
18%
Total
208,334
182,911
14%
^ includes divestment income in India in
Q1FY23, excluding which India YoY growth is at 4% and total company
growth is at 15%
Consolidated Income Statement
[Q3FY24]
Particulars
Q3FY24
Q3FY23
YoY
Q2FY24
QoQ
($)
(Rs.)
($)
(Rs.)
Gr %
($)
(Rs.)
Gr%
Revenues
867
72,148
814
67,700
7
827
68,802
5
Cost of Revenues
360
29,945
332
27,607
8
342
28,434
5
Gross Profit
507
42,203
482
40,093
5
485
40,368
5
% of revenues
58.5%
59.2%
58.7%
Operating Expenses
Selling, General & Administrative
expenses
243
20,228
216
17,981
12
226
18,795
8
% of revenues
28.0%
26.6%
27.3%
Research & Development expenses
67
5,565
58
4,821
15
65
5,447
2
% of revenues
7.7%
7.1%
7.9%
Impairment of non-current assets
1
110
2
134
(18)
1
55
100
Other operating (income)/expense
(12)
(967)
9
732
(232)
(22)
(1796)
(46)
Results from operating
activities
208
17,267
197
16,425
5
215
17,867
(3)
Net finance (income)/expense
(12)
(963)
2
139
(793)
(15)
(1225)
(21)
Share of profit of equity accounted
investees, net of tax
(0)
(27)
(1)
(60)
(55)
(1)
(42)
(36)
Profit before income tax
219
18,257
196
16,346
12
230
19,134
(5)
% of revenues
25.3%
24.1%
27.8%
Income tax expense
54
4,468
47
3875
15
52
4,334
3
Profit for the period
166
13,789
150
12,471
11
178
14,800
(7)
% of revenues
19.1%
18.4%
21.5%
Diluted Earnings Per Share (EPS)
0.99
82.68
0.90
74.95
10
1.07
88.78
(7)
EBITDA Computation [Q3FY24]
*Includes income from Investments
Particulars
Q3FY24
Q3FY23
Q2FY24
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Profit before Income Tax
219
18,257
196
16,346
230
19,134
Interest (income) / expense - Net*
(12)
(1,030)
(1)
(93)
(14)
(1,166)
Depreciation
29
2,437
27
2,245
29
2,437
Amortization
16
1,333
12
1,026
16
1,353
Impairment
1
110
2
134
1
55
EBITDA
254
21,107
236
19,658
262
21,813
% of revenues
29.3%
29.0%
31.7%
Consolidated Income Statement
[9MFY24]
Particulars
9MFY24
9MFY23
YoY
($)
(Rs.)
($)
(Rs.)
Gr %
Revenues
2,504
208,334
2,199
182,911
14
Cost of Revenues
1,036
86,210
956
79,565
8
Gross Profit
1,468
122,124
1,242
103,346
18
% of revenues
58.6%
56.5%
Operating Expenses
Selling, General & Administrative
expenses
682
56,725
601
50,034
13
% of revenues
27.2%
27.4%
Research & Development expenses
192
15,996
168
14,015
14
% of revenues
7.7%
7.7%
Impairment of non-current assets
2
176
2
159
11
Other operating (income)/expense
(43)
(3,543)
(68)
(5,626)
(37)
Results from operating
activities
634
52,770
538
44,764
18
Net finance (income)/expense
(36)
(2,972)
(25)
(2,054)
45
Share of profit of equity accounted
investees
(1)
(112)
(4)
(294)
(62)
Profit before income tax
671
55,854
566
47,112
19
% of revenues
26.8%
25.8%
Income tax expense
159
13,240
140
11,637
14
Profit for the period
512
42,614
426
35,475
20
% of revenues
20.5%
19.4%
Diluted Earnings Per Share
(EPS)
3.07
255.68
2.56
213.24
20
EBITDA Computation [9MFY24]
*Includes income from Investments
Particulars
9MFY24
9MFY23
($)
(Rs.)
($)
(Rs.)
Profit before Income Tax
671
55,854
566
47,112
Interest (income) / expense - Net*
-35
-2,881
1
52
Depreciation
86
7,155
77
6,402
Amortization
48
3,974
37
3,045
Impairment
2
176
2
159
EBITDA
773
64,278
682
56,769
% of revenues
30.9%
31.0%
Key Balance Sheet Items
Particulars
As on 31st Dec 2023
As on 30th Sep 2023
As on 31st Dec 2022
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Cash and cash equivalents and other
investments
922
76,665
839
69,784
603
50,164
Trade receivables
943
78,417
838
69,722
902
75,046
Inventories
731
60,796
680
56,592
593
49,326
Property, plant, and equipment
875
72,795
847
70,478
781
64,996
Goodwill and Other Intangible assets
495
41,192
496
41,278
426
35,401
Loans and borrowings (current &
non-current)
239
19,851
159
13,230
212
17,663
Trade payables
374
31,113
366
30,485
313
26,023
Equity
3,220
267,850
3,042
253,086
2,648
220,273
Key Business Highlights [Q3FY24]
- Acquired the MenoLabs branded portfolio of
women’s health focused supplements in the U.S.
- Exclusive collaboration with Coya Therapeutics for
development and commercialization of COYA 302, an
Investigational Combination Therapy for treatment of Amyotrophic
Lateral Sclerosis (ALS)
- Inspections completed by U.S. FDA at Bachupally
facility. The response to the observations were submitted within
stipulated timelines.
- Product specific Pre-Approval Inspection (PAI) at
biologics manufacturing facility in October 2023, post which
a Form 483 with 9 observations was issued,
- Routine cGMP inspection at formulations manufacturing
facility (FTO-3) in October 2023, post which a Form 483 with
10 observations was issued and
- GMP and Pre-Approval Inspection (PAI) at R&D
unit in December 2023, post which a Form 483 with 3 observations
was issued.
ESG & other Highlights [Q3FY24]
- 1st Indian pharma company to be featured in the Dow
Jones Sustainability World Index for 2023 and retaining our
place in the Emerging Markets Index for the 8th year in a
row.
- Awarded ‘Gold Medal’ status by EcoVadis.
- MSCI ESG ratings upgraded from BB to BBB
- Awarded Golden Peacock awards for Corporate Social
Responsibility, 2023 and Excellence in Corporate Governance,
2023
- Received ICSI Corporate Social Responsibility Excellence
award - 2023, in recognition of our contribution to society
through our CSR initiatives.
- 1st Indian pharma company to pledge towards a plantation
initiative covering 2,900 hectares by 2028 as part of the World
Economic Forum’s 1t.org.
Revenue Analysis [Q3FY24]
- Q3FY24 consolidated revenue at Rs. 72.1 billion, YoY
growth of 7% and QoQ growth of 5%. The YoY growth was primarily
driven by market share gains for our existing products in North
America and continuation of our growth journey in Europe.
Global Generics (GG)
- Q3FY24 revenue at Rs. 63.1 billion, YoY growth of 7% and
QoQ growth of 3%. YoY growth was primarily driven by increase in
volumes of our base business, new product launches, partially
offset by price erosion in certain markets. Sequential growth was
driven by increase in volumes of our base business, offset
partially due to price erosion in certain markets.
North America
- Q3FY24 revenue at Rs. 33.5 billion, YoY growth of 9% and
QoQ growth of 5%. YoY growth was on account of market share
expansion in certain existing key products and revenues from new
product launches, partly offset by price erosion. Sequential growth
was driven by net increase in volumes of our base business.
- During the quarter, we launched 4 new products in the
region, of which 2 were launched in the U.S.
- During the quarter, we filed 2 new Abbreviated New
Drug Applications (ANDAs) with the US Food and Drug
Administration (USFDA). As of 31st December 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
generic filings, 41 are Para IVs, and we believe 21 have ‘First to
File’ status.
Europe
- Q3FY24 revenue at Rs. 5.0 billion, YoY growth of 15% and
QoQ decline of 6%. YoY growth was primarily on account of
contribution from new product launches, improvement in base
business volumes and favourable currency exchange rate movements,
partly offset by price erosion. QoQ decline was primarily on
account of price erosion in certain countries, partly offset by
increase in volumes of our base business.
- Germany at Rs. 2.7 billion, YoY growth of 21% and QoQ
growth of 0.1%.
- UK/OL at Rs. 1.4 billion, YoY growth of 9% and QoQ
decline of 22%.
- Rest of Europe at Rs. 0.9 billion, YoY growth of 11% and
QoQ growth of 7%.
- During the quarter, we launched 6 new products in the
region.
India
- Q3FY24 revenue at Rs. 11.8 billion, YoY growth of 5% and
QoQ decline of 1%. YoY growth was largely attributable to revenues
from new products launches while QoQ decline was largely on lower
volumes in base business.
- During the quarter, we launched 3 new brands in the
country.
Emerging Markets
- Q3FY24 revenue at Rs. 12.8 billion, YoY decline of 2%
and QoQ growth of 6%. YoY decline is attributable to unfavorable
forex movement, while QoQ growth was driven by volume gains for few
existing products and partially offset by unfavorable currency
exchange rate movements.
- Revenue from Russia at Rs. 5.9 billion, YoY decline of
14% and QoQ growth of 2%. YoY decline was majorly due to
unfavorable currency exchange rate movements & high base
business. QoQ growth was largely on account of improved volumes and
increase in certain brand prices, partially offset by unfavorable
currency exchange rate movements.
- Revenue from other CIS countries and Romania at Rs. 2.3
billion, YoY growth of 4% and QoQ growth of 7%. YoY growth was
primarily on account of increase in price of certain brands, new
product launches and favorable forex. QoQ growth was driven by
increase in base business volumes and new launches.
- Revenue from Rest of World (RoW) territories at Rs. 4.6
billion, YoY growth of 16% and QoQ growth of 10%. YoY growth was
largely attributable to contribution from new products. QoQ growth
was primarily driven by increase in base business volumes and new
product launches.
Pharmaceutical Services and Active Ingredients (PSAI)
- Q3FY24 revenue at Rs. 7.8 billion, with a growth of 1%
YoY and 11% QoQ. YoY growth was mainly driven by revenues from new
products, favourable forex, partially offset by price decline and
low business volumes. QoQ growth was driven by improved volumes in
base business and contributions from new product launches.
Excluding revenue in base period from COVID-19 products, PSAI
business grew in double-digit.
- During the quarter, we filed 38 Drug Master Files (DMFs)
globally.
Income Statement Highlights:
- Q3FY24 gross margin at 58.5% (GG: 61.9%, PSAI: 29.4%).
Gross margin decreased by ~73 bps YoY and 18 bps sequentially. The
decline in margin was primarily driven by lower prices for certain
products in generic markets, partly offset by improvement in
product mix and productivity.
- Selling, general & administrative (SG&A) expenses
for Q3FY24 at Rs. 20.2 billion, YoY increase of 12% and by 8%
QoQ. The YoY SG&A spend increase is largely on account of
investments in sales & marketing activities, digitalization
capabilities, and new business initiatives.
- Research & development (R&D) expenses in Q3FY24
at Rs. 5.6 billion. As % to Revenues – Q3FY24: 7.7% | Q2FY24: 7.9%
| Q3FY23: 7.1%. 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 Q3FY24 at Rs. 0.9 billion
compared to other operating expenses of Rs. 0.7 billion in Q3FY23.
Other operating income was largely on account of sale of
non-current assets.
- Net Finance income for Q3FY24 at Rs.0.9 billion compared
to net finance expense of Rs. 0.1 billion in Q3FY23. The higher
income was primarily on account of profit on sale of units of
mutual funds and other investments.
- Profit before Tax for Q3FY24 at Rs. 18.3 billion, YoY
growth of 12%. QoQ decline of 5%.
- Profit after Tax for Q3FY24 at Rs. 13.8 billion, YoY
growth of 11%. QoQ decline of 7%. The effective tax rate for the
quarter has been 24.5% as compared to 23.7% in Q3FY23. The higher
tax rate is mainly due to increase in the proportion of the
Company's profits coming from higher tax jurisdictions, partly
offset by adoption of corporate tax rate under section 115BAA of
the Income Tax Act of India.
- Diluted earnings per share for Q3FY24 is Rs. 82.68
Other Highlights:
- EBITDA for Q3FY24 at Rs. 21.1 billion and the EBITDA
margin is 29.3%.
- Operating Working Capital at Rs. 108.1 billion.
- Capital expenditure for Q3FY24 at Rs. 3.1 billion.
- Free cash-flow for Q3FY24 at Rs. 0.2 billion.
- Net cash surplus at Rs. 59.1 billion as on December 31,
2023.
- Debt to Equity is (0.21).
- ROCE for the company is 37% (annualized).
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
Particulars
Three months ended Dec. 31,
2023
(Rs.)
Net cash generated from operating
activities
10,762
Less:
Taxes
6027
Investments in PPE and Intangibles
4518
Free Cash Flow
217
Operating working capital
Particulars
As on 31st Dec 2023
(Rs.)
Inventories
60,796
Trade Receivables
78,417
Less:
Trade Payables
31,113
Operating Working Capital
108,100
Net cash surplus
Particulars
As on 31st Dec 2023
(Rs.)
Cash and cash equivalents
7,535
Investments
69,130
Short-term borrowings
(12,343)
Long-term borrowings, non-current
(6,152)
Less:
Restricted cash balance – Unclaimed
dividend
122
Lease liabilities (included in Long-term
borrowings, non-current)
(2,352)
Equity Investments (Included in
Investments)
1328
Net Cash Surplus
59,072
Computation of Return on Capital
Employed
Particulars
As on 31st Dec 2023
(Rs.)
Profit before tax
18,257
Less:
Interest and Investment Income (Excluding
forex gain/loss)
1,030
Earnings Before Interest and taxes
[A]
17,227
Average Capital Employed [B]
191,125
Annualized Return on Capital Employed
(A/B) (Ratio)
37%
Computation of capital employed
Particulars
Year Ended
Dec 31, 2023
Mar 31, 2023
Property Plant and Equipment
72,795
66,462
Intangibles
36,905
30,849
Goodwill
4,287
4,245
Investment in equity accounted
associates
4,218
4,702
Other Current Assets
23,512
20,069
Other investments
4,115
660
Other non-current assets
1,128
800
Inventories
60,796
48,670
Trade Receivables
78,417
72,485
Derivative Financial Instruments
-16
1,095
Less:
Other Liabilities
43,159
42,320
Provisions
5,394
5,513
Trade payables
31,113
26,444
Operating Capital Employed
206,491
175,760
Average Capital Employed
191,125
Computation of EBITDA
Refer page no. 3 & 4.
Earnings Call Details
The management of the Company will host an Earnings call to
discuss the Company’s financial performance and answer any
questions from the participants.
Date: January 30, 2024
Time: 19:30 pm IST | 10:00 am
EDT
Conference Joining Information
Option 1: Pre-register with the below
link and join without waiting for the operator
https://services.choruscall.in/DiamondPassRegistration/register?confirmationNumber=1745002&linkSecurityString=a262ce748
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 February 6th, 2024. For play back dial in phone
No: +91 22 7194 5757, and Playback Code is 61003.
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, 2023. The
company assumes no obligation to update any information contained
herein.” The company assumes no obligation to update any
information contained herein.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240131470785/en/
INVESTOR RELATIONS RICHA PERIWAL
richaperiwal@drreddys.com
AISHWARYA SITHARAM aishwaryasitharam@drreddys.com
MEDIA RELATIONS USHA IYER ushaiyer@drreddys.com
Dr Reddys Laboratories (NYSE:RDY)
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Dr Reddys Laboratories (NYSE:RDY)
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