Dr Reddy’s Q3FY22 Preview: Net profit, sales could see double-digit YoY growth for this pharma major

Pharma major Dr Reddy’s Laboratories is likely to report a robust October-December quarter earnings for the financial year 2021-22 on Friday. Several analysts estimate a double-digit year-on-year growth in both top and bottom line, while margins seen to improve during the quarter. 

Brokerage firm Motilal Oswal estimated the adjusted PAT (profit after tax) of the company to grow by over 40 per cent YoY to Rs 835 crore and sales could surge by 15.5 per cent to Rs 5590 crore during Q3FY22. Also expects margins to grow by 160 basis points to 22.9 per cent YoY.  

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In comparison, the company reported adjusted PAT of Rs 594 crore, while sales at Rs 4840 crore in the corresponding quarter of the last fiscal. 

The brokerage expects US sales to grow by 12 per cent YoY to $267 million, driven by ramp-up in g-Vascepa and India revenue to grow by 15 per cent YoY on better traction in the chronic segment and addition of the Wockhardt portfolio. 

Another brokerage firm ShareKhan see a YoY growth of over 22 per cent in adjusted PAT and over 11 per cent rise in the revenue of the company to Rs 765 crore and Rs 5500 crore in Q3 respectively. On the contrary, the brokerage see margins may slip nearly 100 bps to 22 per cent YoY. 

The brokerage says, “The growth in pharma segment is expected to be slow due to pressures in the US business on account of lack of new product approvals, higher competitive pressures.” 

Besides, factors such as improving growth prospects in the US, expected strong growth in the IPM, emerging opportunities in the API space and strong capabilities developed by the Indian companies would drive the growth going ahead in the overall pharma sector, ShareKhan said in preview 

While expecting a modest quarter, Emkay, a domestic brokerage firm, expects good YoY growth in both profit and revenue by 21 and 9 per cent to Rs 748 crore and Rs 5354 crore in Q3FY22.  

Dr. Reddy’s among others is expected to post mid- to high-single digit sequential growth in their US revenues, primarily due to the ramp-up in recently launched products, like Vascepa and Albuterol, Emkay said in its earnings preview.