Dr. Reddy's Laboratories Q2 FY27 Results: Consolidated Net Profit ₹913 Crore

Summary

Figures are in ₹ crore; YoY compares with Q2 FY26 and QoQ with Q1 FY27. Click Total income or Net profit to see the rows behind them.

Total income fell 3.4% year on year, to ₹8,762 crore from ₹9,072 crore. The fall in other income, down 65.9% to ₹91 crore from ₹267 crore, was ₹176.1 crore, larger than the ₹134.3 crore fall in revenue from operations, which declined 1.5% to ₹8,671 crore from ₹8,805 crore. Other income was 7.4% of profit before tax of ₹1,227.7 crore.

Net profit fell 36.0%, to ₹913 crore from ₹1,427 crore, more than profit before tax, which fell 33.1% to ₹1,228 crore from ₹1,835 crore. Tax expense fell 23.0%, to ₹314 crore from ₹408 crore, and the tax charge was 25.6% of profit before tax, against 22.2% a year earlier. Basic EPS was ₹11.10 against ₹17.25, down 35.7%. Against Q1 FY27 net profit rose 110.1% from ₹435 crore; that quarter included a ₹239.7 crore provision for semaglutide batches found out of specification.

Gross margin was 52.1%, against 54.7% a year earlier and 46.5% in Q1 FY27, which is 2.6 percentage points below the year-earlier level. EBITDA was ₹1,782.8 crore, or 20.6% of revenues, down 24.2% from ₹2,351.1 crore a year earlier, and up from ₹1,008.8 crore (12.5% of revenues) in Q1 FY27. Depreciation rose 12.9%, to ₹349 crore from ₹309 crore. Net finance was an expense of ₹32.9 crore, against net income of ₹77.4 crore a year earlier, a swing of ₹110.3 crore; in Q1 FY27 net finance income was ₹173.4 crore.

By region, North America revenue fell 23.2%, to ₹2,489 crore from ₹3,240.8 crore, and the filing says the decline was largely due to lower lenalidomide sales. Emerging Markets revenue rose 24%, to ₹2,059.5 crore, and the filing says growth there was largely driven by new launches across markets, further aided by favourable forex. Two license and service items, ₹52.9 crore from the sale of US territorial rights for Bendamustine HCL and ₹97.6 crore of milestones from a customer in Russia, total ₹150.5 crore, or 1.7% of revenue from operations.

Inference

Basic EPS of ₹11.10 compares with ₹17.25 a year earlier, down 35.7%. Attributable profit of ₹925.0 crore divided by EPS gives about 83.3 crore shares, and the year-earlier figures give the same count (₹1,437.2 crore on ₹17.25), so the per-share and profit figures agree with each other.

On operations, the filing lists a USFDA Form 483 with three observations after a July 2026 inspection at Srikakulam, a Form 483 with four observations after an August 2026 inspection at Bachupally, Hyderabad, and a Form 2953 with two observations for an API facility in Mexico; responses were given within the stipulated timeline in each case. It also records a VAI classification for the Mirfield API facility in the UK, and says appropriate measures are being taken on the semaglutide batches to ensure product quality and resumption of supplies. The distribution agreement with Novartis India for select brands was terminated after a change in Novartis's controlling shareholding. The statutory auditors' limited review of the standalone results gave an unmodified report, and the company expects to fully recover receivables, goodwill, intangible assets, investments and other assets.

What the filing leaves unknown is why other income and gross margin fell, why the tax rate rose, and what the ₹11.6 crore gap between attributable profit and net profit is; these are not known from the text read.

Reference: Original filing (PDF)