The company reported a net profit of ₹443.5 crore, significantly below the CNBC-TV18 poll estimate of ₹817.8 crore. Profit also declined 69% from ₹1,418 crore reported in the corresponding quarter last year.
The company said the June quarter was impacted by an unexpected ₹240 crore provision related to its semaglutide active pharmaceutical ingredient (API) business.
Revenue from operations came in at ₹8,070.5 crore, lower than the Street estimate of ₹8,804.7 crore, and down 6% from ₹8,545.2 crore a year earlier.
Operating performance was equally subdued. EBITDA stood at ₹1,009 crore, missing analysts’ estimate of ₹1,415.3 crore and falling 55% year-on-year from ₹2,278.4 crore.
EBITDA margin contracted sharply to 12.5%, compared with 26.7% in the year-ago quarter, and remained well below the CNBC-TV18 estimate of 16.1%.
The company noted that EBITDA margin was impacted by higher solvent and freight cost arising from West Asia conflict.
The broad-based miss across revenue, profitability and margins suggests that the company faced significant headwinds during the quarter, with operating leverage also coming under pressure.
Commenting on the results, Co-Chairman & MD, G V Prasad said, “Our Q1FY27 performance reflected the expected transition beyond lenalidomide revenues, along with an unexpected impact related to semaglutide AP!.”
However, he said the company’s underlying base business continued to deliver healthy double-digit growth across all key geographies.
“Our focus remains on improving the health of our base business through disciplined execution and operational excellence, while building our future pipeline of peptides, biosimilars and innovative assets to deliver long-term growth,” he added.
The company reported mixed regional performance in the June quarter, with a sharp decline in North America revenue offset in part by strong growth across emerging markets and Europe.
Revenue from North America fell 35% year-on-year to ₹2,200 crore, though it rose 26% sequentially, accounting for 27% of consolidated revenue. The company attributed the year-on-year decline largely to lower sales of Lenalidomide.
During the quarter, Dr Reddy’s launched six new products in the region and filed five Abbreviated New Drug Applications (ANDAs) and one New Drug Application (NDA) with the US Food and Drug Administration (USFDA).
The Emerging Markets business posted revenue of ₹1,830 crore, up 31% year-on-year and 2% quarter-on-quarter, contributing 23% of consolidated revenue.
Growth was driven by new product launches across markets and favourable foreign exchange movements. The company launched 43 new products across emerging markets during the quarter.
Revenue from Europe rose 13% year-on-year to ₹1,440 crore and was flat sequentially, accounting for 18% of consolidated revenue. Growth was supported by new generic launches and favourable currency movements but was moderated by pricing pressure in generics.
Ahead of the earnings announcement, shares of Dr Reddy’s Laboratories Ltd ended 2.16% lower at ₹1,179.90 on the NSE, reflecting cautious investor sentiment heading into the results.
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