Dr Reddy’s results today: share price gains 1%, market expects healthy earnings
- Stock Market Today: Dr Reddy's share price rose more than 1% in morning trades on Tuesday as market expects healthy earnings performance. The high base of last year that included contributions from the launch of Revlimid generics in the US, nevertheless needs to be watched for.
Dr Reddy's Laboratories will be reporting its financial performance for the quarter ending December'23 today. Dr Reddy's share price gained more than 1% in the morning trades ahead of earnings report card to be presented by the company.
The expectations remain high after the healthy December Quarter show reported by Cipla , led by good show both in domestic markets and the US.
The Indian pharmaceutical companies are expected to see good growth in the US during the quarter , led by large product launches and also the lower competitive intensity which is helping them to see lower pricing pressure in the base business.
For Dr Reddy's however the US growth may be softer than peers looking at the high base of last year. Dr Reddy's had launched multiple myeloma treatment drug Revlimid generics on six months exclusivity during 2022 and garnered handsome gains, leading to a high base of December'22 quarter.
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US sales are expected to grow 4% year on year to $384 million for Dr Reddy's as per estimates of Motilal Oswal Financial Services due to steady traction in existing products and adjusting for the continued price erosion.
India revenue are expected to grow 6% year on year. Strong traction in respiratory is expected to be offset by double-digit decline in cardiac therapy.
MOFSL expects revenues for Dr Reddy's at ₹6870 crore growing 1.5% year-on-year. Adjusted net profit at ₹1210 Crore is also to decline 7.5% year-on-year.
Others as Prathamesh P.Masdekar, Research Analyst, StoxBox, said that we expect Dr. Reddy's is likely to report flat numbers in Q3FY24 . On the revenue front, US sales are expected to remain flat sequentially due to the ongoing flattish trend in generic Revlimid sales. Furthermore, the company's domestic and emerging markets may also see low single-digit growth during the quarter. The Earnings before interest tax depreciation and amortisation (Ebitda) and net profit margins are likely to decline sequentially, similar to the previous quarter, where the company reported a gain on settlement related to litigation.
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However Masdekar said that, overall, Dr. Reddy's long-term growth outlook remains intact, and we expect the company to deliver robust performance in the upcoming quarters, led by Revlimid's benefit in US business and injectable approval from the Duvvada unit.
Key Monitorable
Analysts will be watchful on the update on filings, approvals and launches in China. Dr Reddy's having its own frontend in China is eyeing a large pie in the Chinese market.
Analysts will also watch out for key approvals and launches in the US over next 12-15M to drive earnings growth after Dr Reddy's already having reaped benefits from generic Revlimid launch.
We would monitor the management's comments on key focus areas such as US base business, Russia biosimilar launch, and margin trend, said Masdekar
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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