Consolidated revenue of Dr Reddy’s in Q2 is seen falling up to 1% on year to Rs 5,739 crore, against the strong 18% growth seen in the same period last year.
The net profit is expected to drop by 24% on year to Rs 757 crore. This is against a high growth of 29% reported in the same quarter last year.
Dr Reddy’s topline will continue to be aided by sales contributions from the cancer drug Revlimid’s generic. While the overall revenue growth in North America, which makes for 50% of the total sales, is expected to be constrained by price erosion, India is likely to have done well.
Brokerage Kotak Institutional Equities has estimated a $35 million contribution from Revlimid generic sales in the US in Q2. The brokerage expects 5% YoY growth in Europe market revenue and 10% growth in the domestic business.
Global generics make for the lion’s share of the pharma major’s topline, and performance on this front will be closely watched. Global generic sales in Q1 had risen 8% on year.
Operating profit for the quarter is seen declining 9-17% on a high base of last year.
“Margins are likely to correct 320 bps mainly led by the high base effect of Covid (drug sales), licensing income and profit from the disposal of NDA, causing a 17% decline in EBITDA,” brokerage PhillipCapital said in a note.
Besides the US and India, Russia is another key market for Dr Reddy’s, and the political unrest has dampened its sales.
The management’s outlook for Russia, and US markets, planned launches for the rest of the financial year, and an update on the divestment of non-core brands will be some of the key monitorables for investors and analysts.
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