Dr. Reddy’s Q1 FY24 Financial Results

 

 

HYDERABAD, India--(BUSINESS WIRE)-- Dr. Reddy's Laboratories, Inc.  (BSE: 500124 | NSE: DRREDDY | NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated financial results for the quarter ended June 30, 2023. The information mentioned in this release is based on consolidated financial statements under International Financial Reporting Standards (IFRS).

Revenues

     

Rs. 67,384 Mn

 

     

[Up: 29%* YoY; Up: 7%* QoQ]

 

     

 

Gross Margin

     

58.7%

 

     

[Q1 FY23: 49.9%; Q4 FY23: 57.2%]

 

     

 

SG&A Expenses

     

Rs. 17,702 Mn

 

     

[Up: 14% YoY; Down: 2% QoQ]

         

R&D Expenses

      Rs. 4,984 Mn
        [7.4% of Revenues]

 

     

 

EBITDA

     

Rs. 21,372 Mn

 

     

[31.7% of Revenues]

 

     

 

Profit before Tax

     

Rs. 18,463 Mn

 

     

[Up: 26%^ YoY; Up: 39%^ QoQ]

 

     

 

Profit after Tax

     

Rs. 14,025 Mn

 

     

[Up: 18% YoY; Up: 46% QoQ]

* Excluding brand divestment income during the previous periods, Q1 FY24 Sales YoY growth is 35% and QoQ growth is 12%
^ Excluding one offs (settlement income during the current and previous year and brand divestment income during the previous periods), Q1 FY24 PBT YoY growth is 165% and QoQ growth is 68%

Commenting on the results, Co-Chairman & MD, G V Prasad said: “We delivered strong sales growth and witnessed robust margin expansion in Q1FY24 driven by market share gains & new product momentum in our US generics business and superior performance in Russia. We are on track in executing our strategy, delivering growth while continuing to invest in future growth drivers and innovation to create sustainable value.”

All amounts in millions, except EPS. All US dollar amounts based on convenience translation rate of 1 USD = Rs. 82.06

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement

                 

Particulars

Q1 FY24

Q1 FY23

YoY
Gr %

Q4 FY23

QoQ
Gr%

($)

(Rs.)

($)

(Rs.)

($)

(Rs.)

Revenues

821

 

67,384

 

636

 

52,154

 

29

 

767

 

62,968

 

7

 

Cost of Revenues

339

 

27,831

 

319

 

26,148

 

6

 

329

 

26,971

 

3

 

Gross Profit

482

 

39,553

 

317

 

26,006

 

52

 

439

 

35,997

 

10

 

Operating Expenses

 

 

 

 

 

 

 

 

Selling, General & Administrative expenses

216

 

17,702

 

189

 

15,493

 

14

 

219

 

17,992

 

(2

)

Research and Development expenses

61

 

4,984

 

53

 

4,325

 

15

 

65

 

5,366

 

(7

)

Impairment of non-current assets

0

 

11

 

0

 

0

 

 

7

 

540

 

(98

)

Other operating (income)/expense

(10

)

(780

)

(73

)

(6024

)

(87

)

(3

)

(281

)

178

 

Results from operating activities

215

 

17,636

 

149

 

12,212

 

44

 

151

 

12,380

 

42

 

Net finance (income)/expense

(10

)

(784

)

(29

)

(2349

)

(67

)

(10

)

(799

)

(2

)

Share of profit of equity accounted investees

(1

)

(43

)

(1

)

(94

)

(54

)

(1

)

(76

)

(43

)

Profit before income tax

225

 

18,463

 

179

 

14,655

 

26

 

162

 

13,255

 

39

 

Income tax expense

54

 

4,438

 

34

 

2779

 

60

 

45

 

3,663

 

21

 

Profit for the period

171

 

14,025

 

145

 

11,876

 

18

 

117

 

9,592

 

46

 

                 

Diluted Earnings Per Share (EPS)

1.03

 

84.22

 

0.87

 

71.40

 

18

 

0.70

 

57.62

 

46

 

                                 

As % to revenues

     

Q1 FY24

 

Q1 FY23

   

Q4 FY23

Gross Profit

     

58.7

 

49.9

   

57.2

SG&A

     

26.3

 

29.7

   

28.6

R&D

     

7.4

 

8.3

   

8.5

EBITDA

     

31.7

 

34.1

   

25.9

PBT

     

27.4

 

28.1

   

21.1

PAT

     

20.8

 

22.8

   

15.2

                   

EBITDA Computation

           

Particulars

Q1 FY24

 

Q1 FY23

 

Q4 FY23

($)

(Rs.)

 

($)

(Rs.)

 

($)

(Rs.)

Profit before Income Tax

225

18,463

 

179

14,655

 

162

13,255

Interest (income) / expense - Net*

(8)

(685)

 

1

84

 

(8)

(673)

Depreciation

28

2,281

 

25

2,050

 

27

2,213

Amortization

16

1,302

 

12

1,000

 

12

977

Impairment

0

11

 

0

0

 

7

540

EBITDA

260

21,372

 

217

17,789

 

199

16,312

* Includes income from Investments

               
                 

All amounts in millions, except EPS. All US dollar amounts based on convenience translation rate of 1 USD = Rs. 82.06

Key Balance Sheet Items

 

 

 

 

 

 

 

Particulars

As on 30th Jun 2023

 

As on 31st Mar 2023

 

As on 30th Jun 2022

 

($)

(Rs.)

($)

(Rs.)

($)

(Rs.)

Cash and cash equivalents and other investments

745

61,162

761

62,456

432

35,468

Trade receivables

939

77,095

883

72,486

893

73,274

Inventories

639

52,398

593

48,670

631

51,810

Property, plant and equipment

819

67,207

810

66,462

778

63,826

Goodwill and Other Intangible assets

516

42,306

428

35,094

441

36,213

Loans and borrowings (current & non-current)

153

12,520

164

13,472

301

24,666

Trade payables

337

27,682

322

26,444

305

25,052

Equity

2,989

2,45,259

2,815

2,30,991

2,442

2,00,389

             

Revenue Mix by Segment

 

 

 

 

 

 

Segment

Q1 FY24

Q1 FY23

YoY
Gr %

Q4 FY23

QoQ
Gr %

(Rs.)

(Rs.)

(Rs.)

Global Generics

60,083

44,324

36%

54,257

11%

North America

31,978

17,815

79%

25,321

26%

Europe

5,071

4,141

22%

4,960

2%

India

11,482

13,324

-14%

12,834

-11%

Emerging Markets

11,552

9,043

28%

11,142

4%

Pharmaceutical Services and Active Ingredients (PSAI)

6,709

7,090

-5%

7,787

-14%

Others

592

740

-20%

924

-36%

Total

67,384

52,154

29%

62,968

7%

Revenue Analysis [Q1 FY24]

Global Generics (GG)

  • Q1 FY24 revenue at Rs. 60.1 billion, YoY growth of 36% and QoQ growth of 11%. The growth was driven by North America, Emerging Markets and Europe.

North America

  • Q1 FY24 revenue at Rs. 32 billion, YoY growth of 79% and QoQ growth of 26%. The growth was primarily on account of new product launches, continued momentum in existing products, favorable forex rates movement, partly offset by price erosion.
  • During the quarter, we launched six new products in US and two in Canada. We also commercialized the generic prescription portfolio acquired from Mayne Pharma.
  • During the quarter, we filed four new Abbreviated New Drug Applications (ANDAs) with the US Food and Drug Administration (USFDA). As of 30th June 2023, cumulatively 85 generic filings are pending for approval with the USFDA (82 ANDAs and 3 NDAs under 505(b)(2) route). Out of the pending 85 ANDAs, 43 are Para IVs, and we believe 17 have ‘First to File’ status.

Europe

  • Q1 FY24 revenue at Rs. 5.1 billion, YoY growth of 22% and QoQ growth of 2%. The growth was driven by momentum in the base business, new product launches and favorable forex rates movement, partly offset by price erosion.

India

  • Q1 FY24 revenue at Rs. 11.5 billion, YoY decrease of 14% and QoQ decline of 11%. Excluding brand divestment income, sales of divested portfolio from base and NLEM related price reduction impact, India business registered a high single digit growth. This growth was mainly on account of increase in base business volumes.

Emerging Markets

  • Q1 FY24 revenue from Emerging Markets at Rs. 11.6 billion, YoY growth of 28% and QoQ growth of 4%.

- Revenue from Russia for the quarter at Rs. 5.6 billion, YoY growth of 75% and QoQ growth of 9%. YoY growth was driven by uptick in base business, price increase and biosimilars. This was further aided by low base in previous year. QoQ growth was primarily driven by increase in volumes of existing products.

- Revenue from other CIS countries and Romania for the year at Rs. 2.0 billion, YoY growth of 2% and QoQ decline of 14%. YoY growth, primarily on account of price increases on certain products, was offset with decline in base business volumes. QoQ decline was mainly on account of decline in volumes of existing products.

- Revenue from Rest of World (RoW) territories for the year at Rs. 4.0 billion, YoY growth of 1% and QoQ growth of 8%. YoY growth, led by new product launches, was offset by price erosion and lower base business volumes. QoQ growth was mainly driven by new product launches and increase in volumes of existing products.

Pharmaceutical Services and Active Ingredients (PSAI)

  • Q1 FY24 revenue at Rs. 6.7 billion, with a decline of 5% YoY and 14% QoQ. YoY decline was mainly attributable to lower volume pick up by customers for some of our existing products, partly offset with favourable forex rate movement. QoQ decline was mainly attributable to decrease in sales volumes of certain of our existing products.

Income Statement Highlights:

  • Q1 FY24 gross margin at 58.7% (GG: 63.9%, PSAI: 15.0%). Gross margin increased by ~880 bps YoY and by ~150 bps QoQ. The improvement in gross margin was primarily driven by favorable product mix and higher manufacturing leverage partly offset by benefit from brand divestment income during previous year and price erosion in certain products. QoQ growth was primarily on account of favourable product mix partly offset by brand divestment income benefit during preceding quarter.
    • Selling, general & administrative (SG&A) expenses for Q1 FY24 at Rs. 17.7 billion, YoY increase of 14% and declined by 2% QoQ. The YoY SG&A spend increase is in-line with business growth and is largely on account of investment in sales & marketing, digitalization and other business initiatives.
  • Research & development (R&D) expenses in Q1 FY24 at Rs. 5.0 billion. As % to Revenues – Q1FY24: 7.4% | Q4FY23: 8.5% | Q1FY23: 8.3%. We continue our focus on investing in R&D to build a healthy pipeline of new products across our markets for both small molecules and biosimilars.
  • Other operating income for Q1 FY24 at Rs. 0.8 billion compared to Rs. 6 billion in Q1 FY23. Other operating income during the current quarter included settlement income of Rs. 0.5 billion in Canada relating to the generic abiraterone. The net other income in previous year included settlement income of Rs. 5.6 billion relating to the generic buprenorphine and naloxone sublingual film.
  • Net Finance income for Q1 FY24 at Rs.0.8 billion compared to Rs. 2.3 billion in Q1 FY24. The higher income during previous year was primarily on account of higher foreign exchange gain.
  • Profit before Tax for Q1 FY24 at Rs. 18.5 billion, YoY growth of 26%. QoQ growth of 39%
  • Profit after Tax for Q1 FY24 at Rs. 14.0 billion. The effective tax rate for the quarter has been 24.0% as compared to 19.0% in Q1 FY23. The tax rate was lower in pervious year primarily on account of recognition of unrecognized deferred tax assets on operating tax losses.
  • Diluted earnings per share for Q1 FY24 is Rs. 84.22.

Other Highlights:

  • EBITDA for Q1 FY24 at Rs. 21.4 billion and the EBITDA margin is 31.7%.
  • Capital expenditure for Q1 FY24 at Rs. 3.6 billion.
  • Free cash-flow for Q1 FY24 at Rs. 6.7 billion (before acquisition payout).
  • Net cash surplus for the company at Rs. 49.8 billion as on June 30, 2023.

All amounts in millions, except EPS

About key metrics and non-GAAP Financial Measures

This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical performance, financial position or cash flows that are adjusted to exclude or include amounts, as the case may be, from the most directly comparable financial measure calculated and presented in accordance with IFRS.

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS. Our non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. These measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please refer to "Reconciliation of GAAP to Non-GAAP Results" table in this press release.

All amounts in millions, except EPS

Reconciliation of GAAP measures to Non-GAAP measures

   

Free Cash Flow

   

 

Three months Ended June 30, 2023

Net cash generated from operating activities

13,634

 

Less:

 

Taxes

(2,384

)

Investments in PPE and Intangibles

(4,512

)

Free Cash Flow before acquisition

6,738

 

Less:

 

Acquisitions related pay-out

(7,640

)

Free Cash Flow

(902

)

     
Operating working capital
   

 

Quarter Ended

June 30, 2023

Inventories

52,398

 

Trade Receivables

77,095

 

Less:

 

Trade Payables

(27,682

)

Operating Working Capital

101,811

 

     

Net cash surplus

   

 

Quarter Ended

June 30, 2023

Cash and cash equivalents

7,228

 

Investments

53,934

 

Short-term borrowings

(6,468

)

Long-term borrowings, non-current

(4,930

)

Less:

 

Restricted cash balance – Unclaimed dividend

84

 

Lease liabilities (included in Long-term

borrowings, non-current)

(1,130

)

Equity Investments

(included in Investments)

957

 

Net Cash Surplus

49,853

 

     

All amounts in millions, except EPS

Computation of Return on Capital Employed

   

 

Year Ended

June 30, 2023

Profit before tax

18,463

Less:

 

Interest and Investment Income

(Excluding forex gain/loss)

685

Earnings Before Interest and taxes [A]

17,778

 

 

Average Capital Employed [B]

1,84,327

 

 

Return on Capital Employed (A/B) (Ratio)

38.6%

   

Computation of capital employed

 

 

 

 

Year Ended June 30, 2023

Year Ended March 31, 2023

Property Plant and Equipment

67,207

66,462

Intangibles

38,068

30,849

Goodwill

4,238

4,245

Investment in equity accounted associates

4,002

4,702

Other Current Assets

18,511

20,069

Other investments

902

660

Other non-current assets

821

800

Inventories

52,398

48,670

Trade Receivables

77,095

72,485

Derivative Financial Instruments

1,760

1,095

Less:

 

 

Other Liabilities

38,973

42,320

Provisions

5,451

5,513

Trade payables

27,682

26,444

Operating Capital Employed

1,92,896

1,75,760

Average Capital Employed

1,84,327

Computation of EBITDA

Refer page no. 2 for EBITDA computations.

Earnings Call Details (07:30 pm IST, 10:00 am EDT, July 26, 2023)

The management of the Company will host an Earnings call to discuss the Company’s financial performance and answer any questions from the participants.

Conference Joining Information

 

Option 1: Express Join with DiamondPass™

Pre-register with the below link and join without waiting for the operator.

https://services.choruscall.in/DiamondPassRegistration/register?confirmationNumber=5910688&linkSecurityString=1f874b8ec0

Option 2: Join through below Dial-In Numbers

Universal Access Number:

+91 22 6280 1219

+91 22 7115 8120

International Toll Free Number:

USA: 1 866 746 2133

UK: 0 808 101 1573

Singapore: 800 101 2045

Hong Kong: 800 964 448

No password/pin number is necessary to dial in to any of the above numbers. The operator will provide instructions on asking questions before and during the call.

Play Back: The play back will be available after the earnings call, till Aug 2nd, 2023. For play back dial in phone No: +91 22 7194 5757, and Playback Code is 75822.

Transcript: Transcript of the Earnings call will be available on the Company’s website: www.drreddys.com

About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (BSE: 500124, NSE: DRREDDY, NYSE: RDY, NSEIFSC: DRREDDY) is a global pharmaceutical company headquartered in Hyderabad, India. Established in 1984, we are committed to providing access to affordable and innovative medicines. Driven by our purpose of ‘Good Health Can’t Wait’, we offer a portfolio of products and services including APIs, generics, branded generics, biosimilars and OTC. Our major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Our major markets include – USA, India, Russia & CIS countries, China, Brazil and Europe. As a company with a history of deep science that has led to several industry firsts, we continue to plan ahead and invest in businesses of the future. As an early adopter of sustainability and ESG actions, we released our first Sustainability Report in 2004. Our current ESG goals aim to set the bar high in environmental stewardship; access and affordability for patients; diversity; and governance. For more information, log on to: www.drreddys.com.

Disclaimer: This press release may include statements of future expectations and other forward-looking statements that are based on the management’s current views and assumptions and involve known or unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words "may", "will", "should", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to without limitation, (i) general economic conditions such as performance of financial markets, credit defaults , currency exchange rates , interest rates, persistency levels and frequency / severity of insured loss events (ii) mortality and morbidity levels and trends, (iii) changing levels of competition and general competitive factors, (iv) changes in laws and regulations and in the policies of central banks and/or governments, (v) the impact of acquisitions or reorganization, including related integration issues, (vi) the susceptibility of our industry and the markets addressed by our, and our customers’, products and services to economic downturns as a result of natural disasters, epidemics, pandemics or other widespread illness, including coronavirus (or COVID-19), and (vii) other risks and uncertainties identified in our public filings with the Securities and Exchange Commission, including those listed under the "Risk Factors" and "Forward-Looking Statements" sections of our Annual Report on Form 20-F for the year ended March 31, 2023. The company assumes no obligation to update any information contained herein.”

Contacts

INVESTOR RELATIONS
RICHA PERIWAL
richaperiwal@drreddys.com

MEDIA RELATIONS
USHA IYER
ushaiyer@drreddys.com

 
 

Source: Dr. Reddy’s Laboratories Ltd.

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