Dr. Reddy's Q2 Result | A quick glance at all the numbers

Revenue for Q2 stood at Rs 4897 cr which is up 11% (QoQ) and 2% (YOY), EBITDA came at Rs 1267 cr which is 9% up (QoQ) and 12% down (YoY). Gross margins stood at 53.9% down 210 bps QoQ and 360 bps YoY. Profit after tax stood at Rs 762 cr indicating it is up 32% QoQ and down 30% YoY.

Management said that "They are pleased to report continued growth across all the markets and improved productivity which is reflected in the healthy EBITDA margin and RoCE. Their research teams are working on several potential remedies for COVID in addition to the already launched products."

During Q2 FY21 the company saw gradual recovery in the market demand across India, Russia and other markets after a low demand in Q1 FY21, although the demand is yet to fully recover to pre-covid levels. Company launched Covid-19 treatment drugs Avigan (Favipiravir) and Remdesivir. Company further strengthened their development pipeline for Covid-19 treatment drugs including the vaccine candidate Sputnik V.

Other Highlights:

1) Capital expenditure is at Rs 2.5 bn
2) Free cash-flow generated during the quarter stood at Rs. 6 bn.
3) Net debt of the company is at Rs 1.4 bn as on September 30, 2020. Consequently, net debt to equity ratio is 0.01.
4) Diluted earnings per share is at Rs 45.83.
5) Profit before Tax at Rs 8.6 bn, increased by 12% YoY and reduced by 2% sequentially.
6) R&D expenses at Rs 4.4 bn. As % to revenues these are: Q2  FY21: 8.9% I Q1 FY21: 9% I Q2 FY20: 7.6%.

Revenue Analysis

Global Generics (GG)

Revenues from GG segment stood at Rs 39.8 billion, it implies YoY growth of 21 % and sequential quarter growth of 14%, were driven primarily on account of new product launches, volume traction in the base business and integration of the acquired business from Wockhardt in India.

North America

Revenues from North America stood at Rs 18.3 bn, indicating YoY growth of 28%, driven by contribution from new products launched and increase in volumes of our base products and aided by a favourable forex rate, which was partially offset by price erosion. Sequential growth of 6%, on account of volume traction in the base business and new product launches, offset by adverse forex movement and price erosion. Company launched nine new products including Ciprofloxacin & Dexamethasone Otic Suspension, Fulvestrant Injection, OTC Diclofenac and OTC Olapatadine. Company files for two new ANDAs during the quarter. As of 30th September 2020, cumulatively 94 generic filings are pending for approval with the U.S.FDA.

Europe

Revenues from Europe stood at Rs 3.8 billion indicating YoY growth of 36% and sequential growth of 6%, primarily on account of new product launches and favorable forex movement. Company also forayed into a new country Austria.

India

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Revenues from India stood at Rs 9.1 bn indicating YoY growth of 21% and sequential growth of 46%. This was primarily on account of revenues from the acquired business of Wockhardt and contribution from new products including the Avigan (Favipiravir) and Remdesivir launched for treatment of Covid-19.

Emerging Markets

Revenues from Emerging Markets stood at Rs 8.6 bn indicating YoY growth of 4% and Sequential growth of 8%. Revenues from Russia stood at Rs 4 bn indicating YoY decline of 3% on account of weakening Ruble. Sequential growth of 22% contributed by increased volumes with a gradual recovery in market demand after Q1 was impacted due to Covid-19. Revenues from other CIS countries and Romania market stood at Rs 2 bn indicating YoY growth of 19% and sequential growth of 43% driven by both base business and new product launches. Revenues from Rest of World (RoW) territories stood at Rs 2.7 bn indicating YoY growth of 7% driven by new products. Sequential decline of 20% is on account of lower volumes sold for existing products.