Dr Reddy’s Labs Shares Fall 7% on Disappointing Q4 Operating Results

Dr Reddy’s Labs posts 11-fold jump in Q4 profit.

Shares of Dr Reddy’s Laboratories traded at 0.5% on the BSE in Thursday’s intraday trade after the company reported operational missteps in the January-March quarter (Q4FY23) due to lower sales across markets (except Europe) and higher marketing and R&D costs.

In Q4FY23, the company’s revenue rose 18% YoY and fell 8% QoQ to Rs 5,430 crore. The quarter-over-quarter decline in revenue was primarily due to decreases in North America and emerging markets, partially offset by growth in Europe and India, the company said.

In the fourth quarter, the company’s revenue in North America fell 17% quarter-on-quarter to Rs 2,530 crore due to fluctuating demand for new product launches.

EBITDA margin increased 1,605 basis points year-over-year to 24.3%. Adjusted for non-core brand sales, the margins were 21%. Adjusted profit after tax rose 192.6% year-on-year to Rs 952.5 crore. The US business grew 26.8% year-on-year to Rs 2,532 crore due to new product launches and favourable foreign exchange movements, partly offset by lower prices.

Analysts at Prabhudas Lilladher downgraded the stock to “reduce” from “buy” with an updated target price of Rs 4,500 per share (from Rs 4,900 previously).

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