Dr Reddy’s Q3 results: Pharma major posts Rs 570 cr loss

Hyderabad: Pharma major Dr Reddy’s Laboratories on January 27 has posted a loss of Rs 569.7 crore in Q3FY20 due to impairment of non-current assets including generic Nuvaring drug.

The profit in year-ago quarter was Rs 485.2 crore and Rs 1,092.5 crore in July-September quarter.

Revenue during the quarter grew 13.86 percent year-on-year to Rs 4,383.8 crore, driven by growth across regions.

“The current quarter performance has been good across all our businesses and we achieved strong EBITDA margins. The profits were impacted due to trigger based impairment charge taken on a few products including gNuvaring. We continue to focus on execution and have made significant progress on quality systems and operational efficiencies,” Co-Chairman and MD, GV Prasad said.

Its global generics business grew 15 percent to Rs 3,592.7 crore in Q3FY20 YoY, driven by North America business (up 8 percent), Europe (up 52 percent), India (up 13 percent) and Emerging Markets (up 19 percent).

Pharmaceutical services and active ingredients (PSAI) segment increased 16 percent YoY during the quarter ended December 2019, but revenue from proprietary products & others declined 18 percent YoY to Rs 100.5 crore.

Dr Reddy’s Labs said in December 2019, there has been a generic launch and an authorized generic launch for the product Nuvaring, which has led to a considerable erosion in the value of this product, and accordingly it has taken an impairment charge of Rs 1,113.7 crore.

“In addition to this, considering the current market dynamics, we have taken an impairment charge of Rs 206.3 crore on the intangibles pertaining to other products.

In total, company has taken an impairment of Rs 1,320 crore on the intangible assets for this quarter, against an impairment charge of Rs 356 crore in Q2FY20.

At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) increased sharply by 24.1 percent to Rs 1,073.7 crore and margin rose by 200bps to 24.5 percent YoY in Q3.

The operating performance was ahead of the average of estimates of analysts polled by CNBC-TV18 that pegged at Rs 914 crore and 21.9 percent for the quarter respectively.

“Business has been good with good revenue. Margin improvemnt also looks sustainable,” Kunal Dhamesha of SBICAP Securities told CNBC-TV18.

Bhavesh Gandhi, Yes Securities also said margin beat estimates and the US business commentary was good in Q2 which seems reflected in Q3 business.

Loans & borrowings at the end of December quarter fell to Rs 1,632 crore, from Rs 3,155 crore as of September 2019.The stock rallied sharply after earnings, rising 2.10 percent to Rs 3,091.50 on the BSE at 1212 hours IST. It has touched a 52-week high of Rs 3,111.05 intraday.