Dr Reddy's Q1 Results: Semaglutide API provision weighs on profit; margin halves

Dr Reddy's Laboratories

reported a weak set of earnings for the June quarter, with profit, revenue and operating performance missing CNBC-TV18 estimates by a wide margin. The pharmaceutical major also posted a sharp year-on-year decline across key financial metrics, underscoring pressure on profitability during the quarter.

The company reported a net profit of ₹443.5 crore, significantly below the CNBC-TV18 poll estimate of ₹817.8 crore. Profit also declined 69% from ₹1,418 crore reported in the corresponding quarter last year.

The company said the June quarter was impacted by an unexpected ₹240 crore provision related to its semaglutide active pharmaceutical ingredient (API) business.

Revenue from operations came in at ₹8,070.5 crore, lower than the Street estimate of ₹8,804.7 crore, and down 6% from ₹8,545.2 crore a year earlier.

Operating performance was equally subdued. EBITDA stood at ₹1,009 crore, missing analysts' estimate of ₹1,415.3 crore and falling 55% year-on-year from ₹2,278.4 crore.

EBITDA margin contracted sharply to 12.5%, compared with 26.7% in the year-ago quarter, and remained well below the CNBC-TV18 estimate of 16.1%.

The broad-based miss across revenue, profitability and margins suggests that the company faced significant headwinds during the quarter, with operating leverage also coming under pressure.

Ahead of the earnings announcement, shares of Dr Reddy's Laboratories Ltd ended 2.16% lower at ₹1,179.90 on the NSE, reflecting cautious investor sentiment heading into the results.