Dr. Reddy’s profit falls 36% to 925 crore rupees in second quarter
Key Facts
Dr. Reddy’s Laboratories’ consolidated net profit fell 36% year on year to 925 crore rupees in the second quarter of its 2027 fiscal year, which ended on September 30, 2026, Business Standard reported. Net profit after tax was 9.25 billion rupees, compared with 13.47 billion rupees in the same period a year earlier, according to Reuters via MarketScreener. The result nevertheless beat the average analyst estimate of 7.49 billion rupees. Diluted earnings per share from continuing operations fell to 11.1 rupees from 17.25 rupees a year earlier, according to the company’s filing with the U.S. Securities and Exchange Commission. The results came amid a year-on-year decline in revenue, despite an improvement from the previous quarter.
Revenue was 8,670.8 crore rupees, down 1.5% from the same period a year earlier, but up 7.4% from the first quarter of fiscal 2027, when it was 8,070.5 crore rupees, Business Standard reported. The company attributed the weaker performance mainly to lower lenalidomide sales in North America. Revenue in the region fell 23% year on year to 2,489 crore rupees. But its core business there, excluding lenalidomide, grew 12.4%, outpacing market growth of 2.4%. The divergence reflects the impact of lower sales of the product on reported revenue, while the region’s other businesses grew faster than the market.
The co-chairman and managing director said the company had “continued to improve the overall health of its business, delivering double-digit growth in its core business.” In India, revenue rose 17% year on year and 8% from the previous quarter. The company said its ranking in the Indian pharmaceutical market improved to eighth place from tenth a year earlier. Revenue from emerging markets also jumped 84% year on year to 2,059 crore rupees. The company linked the growth to new product launches, acquisitions and favorable currency movements, making these markets a bright spot in the quarter.
Gross margin was 52.1%, while EBITDA margin reached 20.6%, Business Standard reported. Management estimated that higher costs for key raw materials and outbound freight pressured margins by about 100 basis points during the quarter, linking the pressures to the conflict in the Middle East. A summary of the earnings call showed that EBITDA margin fell 6 basis points year on year. Capital expenditure was 186 crore rupees, while free cash flow was 171 crore rupees. The figures show cost pressures coinciding with an annual decline in profit, alongside continued capital spending and free cash flow generation.
In North America, the company launched 6 products in the United States during the quarter and had 80 applications awaiting approval, including 3 new drug applications, according to Business Standard. Attention is also focused on generic semaglutide following production scale-up challenges. The company said on its earnings call that it expects to resume supplying partners and global markets by November 2026. It also expects to supply 6-7 million packs across 10 markets during the third and fourth quarters of fiscal 2027. The timing of the supply resumption and expected market expansion mark the next developments for the product.
In trading on October 22, 2026, the company’s shares closed at $13.23, compared with $13.19 in the previous session, according to EL7 data. The limited move followed the previous day’s close, while results showed year-on-year declines in revenue and profit and a net profit beat against analyst estimates. The comparison between growth in North America’s core business and a drop in the region’s total revenue remains tied to the impact of lenalidomide. A forthcoming milestone set by the company is resuming generic semaglutide supplies by November 2026. Its supply outlook also covers the third and fourth quarters of fiscal 2027.