Dr. Reddy’s shares plunge over 5% despite nine-fold profit in March quarter

Shares of pharmaceutical major Dr. Reddy's Laboratories plunged as much as 5.7% in early trade to ₹4,589 apiece on the BSE on Thursday, a day after the company reported a nine-fold jump in its profit to ₹959.2 crore in March quarter of FY23, as against ₹87.5 crore in the same period last year.

The scrip opened lower on Thursday at ₹4,688 crore as against the closing price of the previous session at ₹4,868. The company's stock surged as much as 3.4% to hit an intraday high of ₹4,704 in the early hours of the trading session. At 9:33 am, the stock was trading 5.24% lower at ₹4,613. In contrast to this, the broader BSE Sensex opened higher at 62,158. In the early hours of the trading session, the company's market capitalisation stood at ₹76,931.30 crore as 7,285 shares were exchanging hands on the BSE as against the two-week average of 7,472 shares. At present, the share price of Dr. Reddy’s is trading 7.6% lower than the 52-week high of ₹4,987 whereas the shares are trading 21.6% lower than the 52-week low of ₹3,787.55.

In the January to March period, the company's revenue from operations surged double-digit by 16% year-on-year (YoY) to ₹6,296.8.2 crore, up from ₹5,436.8 crore in the same period last year, driven by growth in North America, Europe and India markets; however, partially impacted due to a decline in revenues in emerging markets. The company's EBITDA (earnings before interest, taxes, depreciation and amortisation) surged 25.6% YoY to ₹1,631.2 crore, during the quarter under review as against ₹1,298 crore in the same period last year.

On a sequential basis, the company's profit surged 23% QoQ as against ₹1,247.1 crore, whereas its revenue from operations was up 7% QoQ as against ₹6,770 crore in the December quarter. In FY23, the company’s revenue stood at ₹24,588 crore, whereas profit after tax stood at ₹4,507 crore. For the year under review, the company’s EBITDA stood at ₹7,308 crore. In FY23, the revenue of the global generics segment stood at ₹2,138 crore, higher by 19% as compared to FY22 owing to the growth in North America, Europe, and India, while emerging markets remained flat.

"FY23 has been a year of record sales, profits and cash flow, driven by our performance in US Generics. We progressed well in our productivity and sustainability agenda. We will continue to deliver on our purpose, invest in growth drivers and promote a culture that is innovative and collaborative ensuring the future of our business," said G V Prasad, MD, Dr. Reddy's Laboratories.

The company’s board has recommended payment of a dividend of ₹40 per equity share of face value ₹5/- each (800% of face value) for the year ended March 31, 2023.

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