Dr Reddy's Laboratories Q4 review: Here's what to expect

Pharma major Dr Reddy's Laboratories is set to announce its fourth quarter ended March 31, 2017 result on Friday. 

The company in last three quarters of financial year 2016-17 (FY17) has recorded a decline in its net profit.

In Q3FY17, the company reported consolidated net profit of Rs 492.3 crore, down 15.94% year-on-year compared to Rs 585.7 crore in the corresponding period of the previous year.

Consolidated total income stood at Rs 3,723.2 crore for the period, down by 6.44% versus Rs 3,979.7 crore a year ago same period.

Dr Reddy's net profit witnessed decline of 80% in Q1FY17 and 60% in Q2FY17. 

Will Q4 be any different? 

Analysts at Motilal Oswal said, "Dr Reddy’s Lab is expected to report flattish growth in 4QFY17 YoY, with revenue at Rs 3760 crore. US business is likely to decline 17% YoY to Rs 1560 crore, while Russia and CIS region sales are expected to decline in single-digits due to currency devaluation. However, India business is expected to report robust growth in 4QFY17."

Edelweiss Financial Services said, "Expect US revenue $236 million to decline by 16% YoY due to increased competition in Dacogen, Valcyte and Vidaza and also down 4% QoQ due to lack of launches. Russia/CIS revenues up 10% YoY in CC and currency up ~26% YoY."

Going ahead, in India, Edelweiss expects the growth to be mellow at 12% YoY. Gross margin to come back to 56% level after Q3FY17's abnormal margin that was driven by seasonality of injectables.

Motilal expects EBITDA (operating profit) to marginally increase 4% YoY to Rs 860 crore  and the margin to increase 80 basis points YoY to 22.8%. 

Profit after tax is expected to increase 23.6% YoY to Rs 470 crore, on back of lower tax rate of 22.2% as against 70% in 3QFY16, said Motilal.