Q4FY13: Dr Reddy's Beats Market Expectations
DSIJ Intelligence / 15 May 2013
The company has seen a strong growth in its revenues from all segments and geographies, and it is not likely to slow down anytime soon.
Dr Reddy's laboratories surprised the markets with a 67% rise in its net profit for Q4FY13. The company achieved 26% growth in its topline to Rs 3339 crore. It also achieved a dividend of Rs 13.75 on the face value of Rs 5.
Its revenues rose in all major territories. Those from the global generics segment rose by 22.67% while that of pharma services and active ingredients rose by 36%. Revenues from the North America grew by 36% to Rs 1347 crore. The growth in the US market was driven by introduction of limited competition products. The launch of 14 products in the year also helped the company to clock the high revenues in USA.
Revenues in Europe also grew by 36% to Rs 622 crore. In India, they were at Rs 509 crore which grew by 13% YoY. Russian revenues also grew by more than 27% and stood at Rs 452 crore. Revenues in the rest of the world markets grew by just 3%. This segment is however the smallest segment of the company in geographical terms.
The company, for the quarter, has recorded EBITDA margins of 27.82%. The margins in Q4FY12 were at 25.57% and hence the margins in the quarter have shown an expansion of 225 bps. The Q4FY13 margins are the best in the last 5 quarters.
During the conference call, the company has said that the revenue growth is not expected to slow down as it plans to increase the research and development costs. For the quarter, its R&D expenditure remained at 7% of the revenues while that for the year was at 6.5%. Going ahead too, it expects to increase the R&D expenses and hence one can expect more product filings from the company in the US markets. For the year, the company has filed 19 products in the US market. It cumulatively has 65 ANDAs pending approval of which 38 are Para IV filings and 8 are First to file filings.
Overall, the Q4 numbers were higher than expected implying that the company is seeing a huge demand for its products. We believe that the ramp-up of the R&D would further provide an impetus to the revenues. Long-term buyers should buy the stock at the CMP.
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