Strong India growth boosts DRL Q1 profit by 108% to Rs 1,188 crore

Hyderabad-based Dr Reddy’s Laboratories (DRL) has posted a sharp 108 per cent YoY rise in its Q1FY23 profit after tax -- which came in at Rs 1,188 crore -- riding on strong growth in its India business. The revenue for the June quarter was up 6 per cent to Rs 5,215 crore.

The DRL stock was down marginally (0.73 per cent) to Rs 4,254 on the BSE on Thursday. The company’s India business grew by 26 per cent YoY to Rs 1,333.9 crore. This was driven by the divestment of a few non-core brands, the company said.

M V Ramana, CEO of branded markets (India and emerging markets), said that the company has decided to focus on big brands. Therefore, the company’s focus would be primarily on segments where it has a strong presence like oncology and dermatology.

The pharma major acquired Novartis’ cardiovascular brand Cidmus in April for Rs 456 crore, and is now eyeing good numbers from it. India growth was partially offset a decline in Covid product sales during the June 2022 quarter against Q1FY22. India now contributes 26 per cent to DRL’s revenues.

Commenting on the results, Co-chairman and MD G V Prasad said: “Our underlying business revenues, adjusted for Covid products’ contribution during last year, have grown well. The profit was aided by a few non-recurring incomes, offsetting the near-term headwinds. We continue to improve the health of our core businesses through productivity improvement and a robust product pipeline”.

The North America business grew 2 per cent, while Europe grew 4 per cent. Emerging markets have declined by 1 per cent YoY during the quarter, thanks to a channel inventory normalisation in Russia. The Russian revenue worth Rs 320 crore was down 9 per cent YoY.

The North America business has declined 11 per cent sequentially due to price erosion. DRL said that it plans to launch 25 products in that geography during the year.