Dr. Reddy’s Laboratories Ltd.’s first quarter after-tax profit surged, beating estimates on account of high other non-operating income.
The Hyderabad-based drugmaker’s net profit stood at Rs 1,189 crore in the three months ended June, up 2.1 times over the previous year, according to its exchange filing. That compares with the Rs 699-crore consensus estimate of analysts tracked by Bloomberg.
The non-operating other income stood at Rs 854 crore, up 6.9 times over the previous year.
“The other income jumped on account of brand divestments—sales of two branded portfolios, favourable settlement of litigation in the U.S., and forex gains due to favourable Ruble,” MV Ramana, executive vice president and head of the branded formulations business at Dr. Reddy’s, told BQ Prime.
Dr. Reddy’s Q1 FY23 Highlights (YoY)
Revenue rose 6% to Rs 5,233 crore, compared with the Rs 5,389-crore estimate.
Ebitda was up 2.5% at Rs 941 crore against the Rs 1,116-crore forecast.
Margin was at 18% against 18.6% a year ago and an estimate of 20.7%.
“The profits were aided by a few non-recurring incomes, offsetting the near term headwinds,” GV Prasad, co-chairman and managing director at Dr. Reddy’s, said in the exchange filing. “We continue to improve the health of our core businesses through productivity improvement and robust product pipelines.”
The drugmaker is working towards growth in branded markets, i.e. India and emerging markets, Ramana told BQ Prime. The pharma company is on track with new product launches that would push growth in the U.S. and European markets.
Dr. Reddy’s aim is to grow organically by building big brands in both generic and over-the-counter medicines, he said. The intent is to launch more products in institutional businesses that would benefit across markets viz. U.S., Europe and emerging markets, he said.
The management alluded an Ebitda and return on capital employed guidance of 25% in the post-earnings conference call.
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