By-Prathamesh Masdekar, Research Analyst, StoxBox

– The Company reported revenue growth of 16.5% YoY and 4.4% QoQ to Rs. 8,038 crores, above market expectations of Rs. 7,717 crores.
– The Global Generics (GG) segment witnessed broad based revenue growth of 17.0% YoY / up 4.0% QoQ to Rs. 7,158 crores, driven by improved sales volumes and new product launches. Emerging Markets and Europe primarily drove sequential growth.
– EBITDA increased 3.4% YoY / down 2.5% QoQ to Rs. 2,077 crores, while EBITDA margin stood at 25.8% (down 326bps YoY / down 184bps QoQ) in Q2FY25, owing to a contraction in gross margins by 110 bps QoQ to 70.6% the decline was primarily on account of change in mix.
– Profit after Tax stood at Rs. 1,342 crores (down 9.5% YoY / down 3.6% QoQ) in Q2FY25, below market expectations of Rs. 1,427 crores. The PAT margin was 16.7% versus 18.1% in the previous quarter.
– R&D expenses stood at Rs. 727.1 crores (9.1% of sales), and the company continued to invest in R&D to build a healthy pipeline of new products across markets for biosimilars as well as novel oncology assets, which will support future growth.
– During the quarter, the company had two new ANDAs with the USFDA, taking the year-to-date ANDA filing count to three. As of 30 September 2024, 80 generic filings are cumulatively pending approval with the USFDA (75 ANDAs and 5 NDAs under 505(b)(2) route).
– The company entered into a non-exclusive patent licensing agreement with Takeda to commercialise Vonoprazan, a novel gastrointestinal drug, in India.
– During the quarter, the company launched three new brands in the domestic market, taking the YTD total to 16. The company also integrated the nutraceutical products under a subsidiary, Dr Reddy’s and Nestle Health Science Ltd.

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The company delivered another good quarter and maintained the growth momentum across businesses, including the operationalisation of its venture with Nestlé and the acquisition of Nicotinell® and related brands. North America saw a double-digit rise in revenues, primarily led by increased sales volumes, despite some price erosion. In Europe, revenues grew by new product launches. The Indian market reported increased revenues, bolstered by its vaccine portfolio and recent price adjustments. Emerging markets experienced robust growth due to market share expansion and product launches. Further, the company will actively look for new investment avenues for growth across all the business segments, strengthen core businesses, and make strategic investments in biologics and consumer healthcare to drive patient impact and value creation. We thus believe Dr Reddy’s long-term growth outlook remains intact, and we expect the company to continue to deliver robust performance in the upcoming quarters.