Dr Reddy's Labs Lags Analyst Estimates
DSIJ Intelligence / 31 Jul 2013
Hyderabad-based Dr Reddy's Laboratories has reported below par Q1 results for the quarter ended June 2013. The company reported 12% growth in its revenues to Rs 2844 crore and 7.4% growth in the net profit to Rs 361 crore. The street had expected revenues of Rs 3116 crore and net profit of Rs 329 crore for the quarter.
The company’s growth is mainly driven by growth in its North American revenues which have reported 33% growth. This, however, is offset by a decline of 17% in the European revenues. Domestic revenues grew only 4.7% while that in Russia and the rest of the world (ROW) markets managed to grow by 8% and 15% respectively. The total generics revenues grew by 15% while that in the pharmaceutical services and active ingredients (PSAI) segment grew by 6%.
The company has said that it has launched 2 new products in the US markets during the quarter.
Its R&D expenses for the quarter rose by 55% and stood at 8.5% of the revenues against 6.2% in the corresponding quarter of the last fiscal. The company has said that the announcement of the new pharma pricing policy has led to the de-stocking in trade. This, along with the trade strike in Maharashtra, has had a negative impact on its domestic revenues.
Its EBITDA margins in the quarter remained at 20% against 19.94% reported a year ago, showing marginal improvement. Its tax rate during the quarter remained at 13% against 9.32% a year ago. The company has also incurred a forex loss of Rs 13 crore against Rs 20 crore a year ago. It has hedged is positions near the spot price and hence there is a decline in forex losses.
During the quarter, the company has launched 18 new generic drugs and filed 12 new product registrations. It has also filed two ANDAs during the quarter and has a pipeline of 64 ANDAs pending approval.
The stock, after the result, has shown volatility. The shares of the company had touched a new high of Rs 2400 this month from which they have now cracked by over 9%. We set a target price of Rs 2300 on this stock.
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