Earnings Outlook
Revlimid sales to aid Dr Reddy's earnings for one more quarter
This story was originally published at 10:17 IST on 5 May 2025
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By Narayana Krishna
HYDERABAD - Robust sales of cancer drug generic Revlimid coupled with strong growth in Europe and India are likely to help Dr. Reddy's Laboratories Ltd. report healthy growth for the March quarter, according to analysts.
Dr. Reddy's, a leading beneficiary among eight generic companies competing for Revlimid market share in the US, which is a $3-billion dollar drug market, is a clear winner with significant market share gains, according to analysts. This will help the company report decent margins.
Analysts expect Dr. Reddy's to report an 11% on-year rise in its Jan-Mar consolidated net profit to INR 14.5 billion, while revenue for the quarter is seen up 17% on year at INR 83.4 billion, according to an average of estimates from 15 brokerages. Sequentially, the net profit is seen up 3%, while revenue is seen falling marginally by 0.5%, the estimates show.
Analysts' estimates for Dr. Reddy's Jan-Mar net profit range from INR 12.02 billion, the lowest estimate from brokerage Nomura Equity Research, to INR 18.14 billion, the highest projection from ICICI Securities Ltd. The estimates for revenue range from a low of INR 79.81 billion by Nuvama Wealth Management Ltd. to a high of INR 86.87 billion from PhillipCapital (India) Pvt. Ltd.
The company is scheduled to announce its Jan-Mar earnings on Friday.
EYES ON US
Analysts are keenly tracking pharmaceutical companies to get a sense of the possible impact of US tariffs and their strategies to mitigate the impact. While analysts have a consensus on Revlimid's contribution to Dr. Reddy's March quarters sales, they projected mixed growth numbers for the drug maker's US sales growth, considering the price erosion in some of the key products. The US contributes over 45% of Dr. Reddy's total sales.
Analysts projected the company's US sales for Jan-Mar to grow 3-14% on year. However, analysts see Revlimid sales contribution to be around $150 million–$160 million for the quarter, up from $130 million a year ago.
Centrum Broking Ltd. has the lowest projection for US sales growth at 3% to $402 million in Jan-Mar and ICICI Securities has the highest projection for US sales at 13.6% to $445 million.
HDFC Securities Ltd. said Dr. Reddy's US business would see 4% sequential growth due to Revlimid sales, which will be partly offset by price and market share erosion in the base business due to incremental competition in key products.
Dr. Reddy's is expected to see decent growth for the March quarter in India, aided by the vaccines business it acquired from Sanofi, analysts said. Nuvama Wealth Management Ltd. projects the company to report 11% on-year growth in domestic sales for the quarter, while vaccine sales would contribute INR 900 million.
Dr. Reddy's Europe sales performance for the quarter is likely to be boosted by integration of the acquired Nicotinell portfolio. Choice Equity Broking Pvt. Ltd. expects Dr. Reddy's consolidated revenue to grow 12.6% on year, led by the integration of the Nicotinell portfolio in Europe, the scaling up of the nutraceuticals business in India, and new product launches such as Dasatinib, which is used to treat leukemia.
MARGINS
Most analysts expect Dr. Reddy's March quarter earnings before interest, tax, depreciation, and amortisation margins to expand on a year-on-year basis, supported by a favorable product mix and Revlimid. The average of estimates from 15 brokerages for the company's March quarter EBITDA is INR 22.41 billion. The EBITDA margin estimates ranged between 25.0% and 28.2%.
PhillipCapital (India) Pvt. Ltd. said Dr. Reddy's March quarter margins would improve 210 basis points on-year, mainly due to higher Revlimid sales and strong growth in the domestic formulation business, leading to a 33% on-year growth in EBITDA.
Besides future strategy for the US, analysts are keenly awaiting the company's commentary on biosimilars and opportunity in GLP-1 drugs, and the launch pipeline for 2025-26 (Apr-Mar).
Dr. Reddy's stock has gained nearly 6% in the past 30 days but lost 15% so far in 2025.
At 0925 IST, shares of Dr. Reddy's traded at INR 1,182.10 on the National Stock Exchange, down 1.5% from its previous close.
Following are the Jan-Mar earnings estimates for Dr Reddy's Laboratories Ltd. based on reports from 15 brokerage firms in the descending order by the estimate of net profit:
|
Brokerage name |
Net Sales |
Net Profit |
EBITDA |
|
|
--in million rupees-- |
||
|
ICICI Securities Ltd |
84,683.00 |
18,146.00 |
23,776.00 |
|
Systematix Shares and Stocks (India) Ltd |
86,387.00 |
16,533.00 |
26,070.00 |
|
Prabhudas Lilladher Pvt Ltd |
83,654.00 |
16,263.00 |
21,853.00 |
|
Choice Equity Broking Pvt Ltd |
80,112.00 |
15,499.00 |
22,431.00 |
|
Centrum Broking Ltd |
83,118.00 |
15,295.00 |
22,365.00 |
|
Kotak Institutional Equities |
85,358.00 |
15,032.00 |
23,752.00 |
|
PhillipCapital (India) Pvt Ltd |
86,868.00 |
14,962.00 |
24,512.00 |
|
Nirmal Bang Equities Pvt Ltd |
83,241.00 |
14,878.00 |
22,464.00 |
|
Equirus Securities Pvt Ltd |
83,902.00 |
13,948.00 |
22,585.00 |
|
HDFC Securities Ltd |
83,305.00 |
13,857.00 |
22,371.00 |
|
Motilal Oswal Financial Services Ltd |
82,800.00 |
13,700.00 |
21,900.00 |
|
Nuvama Wealth Management Ltd |
79,812.00 |
13,240.00 |
20,658.00 |
|
Elara Securities (India) Pvt Ltd |
84,163.00 |
12,613.00 |
19,991.00 |
|
JM Financial Institutional Securities Pvt Ltd |
81,549.00 |
12,154.00 |
20,892.00 |
|
Nomura Equity Research |
81,963.00 |
12,024.00 |
20,521.00 |
|
Average |
83,394.33 |
14,542.93 |
22,409.40 |
End
US$1 = INR 84.24
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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