Dr Reddy’s Q3 Results: Profit beats estimates on higher revenue, despite YoY decline

Pharma major Dr Reddy’s Laboratories Ltd on Wednesday (January 21) reported a net profit of ₹1,209 crore for the third quarter, higher than the CNBC-TV18 poll estimate of ₹1,132 crore.

Revenue for the quarter

stood at ₹8,753 crore, surpassing the estimate of ₹8,273 crore, while EBITDA came in at ₹1,887.4 crore compared with the poll expectation of ₹1,803 crore. The EBITDA margin for the quarter was at 21.5%, marginally lower than the estimated 21.80%.

On a year-on-year basis, net profit declined 14.5% from ₹1,413 crore in the same quarter last year. Revenue, however, rose 4.4% year-on-year from ₹8,381 crore. EBITDA fell 17% compared with ₹2,273 crore reported a year ago. Margins saw a sharp contraction on a year-on-year basis, declining to 21.5% from 27.1% in the corresponding quarter last year.

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For 9MFY26, consolidated revenues came in at ₹26,080 crore, marking a growth of 8% year-on-year. Growth was broad-based across key markets, except North America generics, which reported a decline mainly due to lower lenalidomide sales. The performance was also supported by favourable foreign exchange movements.

Global generics revenues in Q3FY26 were ₹7,910 crore, up 7% year-on-year and 1% quarter-on-quarter. For 9MFY26, global generics revenues rose 9% year-on-year to ₹23,320 crore.

North America revenues declined in Q3FY26 to ₹2,960 crore, down 12% year-on-year and 9% sequentially. For 9MFY26, revenues stood at ₹9,620 crore, a decline of 12% year-on-year. The fall was largely due to lower lenalidomide sales and higher price erosion in certain key products.

During the quarter, six new products debuted, taking the total launches to 18 in 9MFY26. Four new ANDAs were filed with the US FDA during the quarter, taking the total to 10 for 9MFY26. As of December 31, 2025, 73 filings were pending approval from the FDA, including 71 ANDAs, of which 43 were Paragraph IV applications, and 21 may have first-to-file status, along with two NDAs filed.

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Europe revenues in Q3FY26 rose 20% year-on-year and 5% quarter-on-quarter to ₹4,450 crore. For 9MFY26, Europe revenues surged 77% year-on-year to ₹4,100 crore; excluding the NRT portfolio, growth was 16% year-on-year. Revenues benefited from new generic launches, growth in the NRT portfolio and favourable forex, partly offset by pricing pressure.

NRT revenues in Q3FY26 stood at ₹1,500 crore, up 25% year-on-year and 8% sequentially, while 9MFY26 NRT revenues were ₹2,120 crore. Germany revenues in Q3FY26 rose 21% year-on-year to ₹400 crore, while UK revenues declined 12% year-on-year to ₹270 crore but grew 6% sequentially. Rest of Europe revenues jumped 49% year-on-year in Q3FY26 to ₹330 crore.

India revenues for Q3FY26 stood at ₹1,600 crore, growing 19% year-on-year and 2% quarter-on-quarter. For 9MFY26, revenues rose 14% year-on-year to ₹4,650 crore. Growth was driven by the innovation portfolio, new brand launches, price increases, higher volumes and contributions from the Stugeron portfolio. Secondary sales growth stood at 12.3% on an MQT basis and 9.7% on a MAT basis, ahead of overall IPM growth. Two new brands were launched during the quarter, taking the total to 18 in 9MFY26.

Emerging markets’ revenues in Q3FY26 rose 32% year-on-year and 15% quarter-on-quarter to ₹900 crore. For 9MFY26, revenues grew 21% year-on-year to ₹1,960 crore. Russia revenues stood at ₹600 crore in Q3FY26, up 51% year-on-year and 21% sequentially, while 9MFY26 revenues rose 36% year-on-year to ₹2,640 crore.

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Revenues from other CIS countries and Romania were ₹240 crore in Q3FY26, up 1% year-on-year, while rest of world revenues rose 21% year-on-year to ₹600 crore. During Q3FY26, 30 new products were launched across countries, taking the total launches to 80 in 9MFY26.

Dr Reddy’s Laboratories reported an operating working capital of ₹4,140 crore as of December 31, 2025. Capital expenditure during the quarter was ₹670 crore, while free cash flow stood at ₹370 crore. The company’s net cash surplus as of 31st December 2025 was ₹3,070 crore, with a net debt-to-equity ratio of (0.08). Annualised return on capital employed (RoCE) for the quarter was 20.4%.

Shares of Dr Reddy's Laboratories Ltd ended at ₹1,155.50, down by ₹11.40, or 0.98%, on the BSE today, January 21.