Dr. Reddy’s Q1 FY23 Financial Results

Telugusupernews.com,Hyderabad, India, July 29, 2022: Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY |NYSE: RDY | NSEIFSC: DRREDDY) today announced its consolidated financial results for the quarter ended June 30, 2022. The information mentioned in this release is on the basis of consolidated financial statements under International Financial Reporting Standards (IFRS).

Commenting on the results, Co-Chairman & MD, G V Prasad said “Our underlying business revenues adjusted for
covid products contribution during last year have grown well. The profits were aided by a few non-recurring
incomes, offsetting the near term headwinds. We continue to improve the health of our core businesses through
productivity improvement and robust product pipelines”.
Revenues
Gross Margin

SG&A Expenses

R&D Expenses

EBITDA

Profit before Tax

Profit after Tax

Rs. 5,215 Cr
[Up: 6% YoY; Down: 4% QoQ]
49.9%
[Q1 FY22: 52.2%; Q4 FY22: 52.9%]
Rs. 1,549 Cr
[Up: 3% YoY; Down: 1% QoQ]
Rs. 433 Cr
[8.3% of Revenues]
Rs. 1,779 Cr
[34.1% of Revenues]
Rs. 1,466 Cr
[Up: 97% YoY; Up: 490% QoQ]
Rs. 1,188 Cr
[Up: 108% YoY; Up: 1,257% QoQ]

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All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 79.02

Dr. Reddy’s Laboratories Limited and Subsidiaries

Consolidated Income Statement
Particulars Q1 FY23 Q1 FY22 YoY
Gr %

Q4 FY22 QoQ
Gr% ($) (Rs.) ($) (Rs.) ($) (Rs.)

Revenues 660 52,154 623 49,19

4 6 688 54,36
8 (4)
Cost of Revenues 331 26,148 297 23,495 11 324 25,625 2
Gross Profit 329 26,006 325 25,69

9 1 364 28,74
3 (10)

Operating Expenses                
Selling, General & Administrative
expenses 196 15,493 190 15,045 3 198 15,674 (1)
Research and Development
expenses 55 4,325 57 4,534 (5) 55 4,326 (0)
Impairment of non-current assets – – – – 95 7,515 (100)
Other operating income (76) (6,024) (6) (487) 1,137 (4) (291) 1,970
Results from operating activities 155 12,212 84 6,607 85 19 1,519 704
Net finance income (30) (2,349) (8) (652) 260 (11) (859) 173
Share of profit of equity accounted
investees (1) (94) (2) (166) (43) (1) (105) (10)
Profit before income tax 185 14,655 94 7,425 97 31 2,483 490
Income tax expense 35 2,779 22 1,717 62 20 1,608 73
Profit for the period 150 11,876 72 5,708 108 11 875 1,257
Diluted Earnings Per Share (EPS) 0.90 71.40 0.43 34.34 109 0.07 5.26 1,261

As % to revenues Q1 FY23 Q1 FY22 Q4 FY22
Gross Profit 49.9 52.2 52.9
SG&A 29.7 30.6 28.8
R&D 8.3 9.2 8.0
EBITDA 34.1 20.7 23.9
PBT 28.1 15.1 4.6
PAT 22.8 11.6 1.6

EBITDA Computation

Particulars Q1 FY23 Q1 FY22 Q4 FY22
($) (Rs.) ($) (Rs.) ($) (Rs.)
Profit before Income Tax 185 14,655 94 7,425 31 2,483
Interest (income) / expense (net)* 1 84 (2) (142) 0 24
Depreciation 26 2,050 25 1,973 26 2,039
Amortization 13 1,000 12 932 12 920
Impairment – – – – 95 7,515
EBITDA 225 17,789 129 10,188 164 12,98
0

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• Includes income from Investments
  All amounts in millions, except EPS All US dollar amounts based on convenience translation rate of I USD = Rs. 79.02

Key Balance Sheet Items

Particulars

As on 30 th Jun
2022

As on 31 st Mar
2022

As on 30 th Jun
2021
($) (Rs.) ($) (Rs.) ($) (Rs.)

Cash and cash equivalents and other
investments 449 35,467 608 48,033 435 34,356
Trade receivables 927 73,274 846 66,818 774 61,148
Inventories 656 51,810 644 50,884 643 50,771
Property, plant and equipment 808 63,826 787 62,169 742 58,636
Goodwill and Other Intangible assets 458 36,213 401 31,664 503 39,746
Loans and borrowings (current & non-current) 312 24,666 428 33,845 422 33,373
Trade payables 317 25,052 324 25,572 362 28,607
Equity 2,531 2,00,039 2,411 1,90,52

7 2,254 1,78,11
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Revenue Mix by Segment
Segment Q1 FY23 Q1 FY22 YoY
Gr %

Q4 FY22 QoQ
Gr % (Rs.) (Rs.) (Rs.)
Global Generics 44,324 41,113 8 46,118 (4)
North America 17,815 17,390 2 19,971 (11)
Europe 4,141 3,994 4 4,444 (7)
India 13,339 10,600 26 9,689 38
Emerging Markets 9,028 9,129 (1) 12,013 (25)
Pharmaceutical Services and Active
Ingredients (PSAI) 7,090 7,540 (6) 7,557 (6)
Others 740 541 37 693 7
Total 52,154 49,194 6 54,368 (4)

34%

8%

26%
17%
14%
1%
Q1 FY23 Sales Mix

North America
Europe
India
Emerging Markets
PSAI
Others

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Revenue Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 44.3 billion:
 Year-on-year growth of 8% was driven by new product launches across most of our businesses and
divestment of a few non-core brands in India, partly offset by price erosion in our generic markets,
and higher base due to covid product sales in previous year.
 Sequential decline of 4% was due to sales decline in North America (incremental competition on key
products and price erosion) and Emerging Markets (normalization of channel inventory in Russia).
This was partly offset by new product launches.
North America
Revenues from North America at Rs. 17.8 billion:
 Year-on-year growth of 2%, driven by launch of new products and favorable forex rates, which was
offset by price erosion in some of our key molecules.
 Sequential decline of 11% was primarily on account of price erosion and decline in volumes for few
products due to incremental competition.
 During this quarter, we launched 7 new products. This includes launch of Ketorolac, OTC Nicotine
Lozenges Original, Methylprednisolone Sodium Succinate, Pemetrexed Injection, Posaconazole Tabs
and Sorafenib in the US and Pemetrexed Inj. in Canada.
 We filed three ANDAs during the quarter. As of 30 th June 2022, cumulatively 86 generic filings are
pending for approval with the USFDA (83 ANDAs and 3 NDAs under 505(b)(2) route). Out of these
86 pending filings, 44 are Para IVs and we believe 24 have ‘First to File’ status.
Europe
Revenues from Europe at Rs. 4.1 billion:
 Year-on-year growth of 4%, driven by launch of new products and scale up of base business, which
was partly offset by price erosion in some molecules and adverse forex rates during the quarter.
 Sequential decline of 7% was primarily on account of price erosion and adverse forex rates, which
was partly offset by volume traction in base business.
India
Revenues from India at Rs. 13.3 billion:
 Year-on-year growth of 26% was driven by divestment of a few non-core brands, revenue
contribution from the products acquired / in-licensed from Novartis, growth in base business and
new products contribution. The growth was partially offset due to covid product sales in Q1 FY22
which was not there in the current quarter.

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 Sequential growth of 38% was primarily driven by divestment of a few non-core brands, revenue
contribution from the products acquired / in-licensed from Novartis, new products contribution
and growth in base business.
 We launched five new products during the quarter.
Emerging Markets
Revenues from Emerging Markets at Rs. 9.0 billion. Year-on-year decline of 1% and sequential decline of
25%:
 Revenues for Russia at Rs. 3.2 billion. Year-on-year decline of 9% is primarily due to channel
inventory normalization post stocking up in Q4 FY22, which was partly offset with launch of new
products. Sequential decline of 53% was due to higher base in Q4 FY22 from brand divestment
income and channel inventory normalization in the current quarter.
 Revenues from other CIS countries and Romania at Rs. 1.9 billion. Year-on-year growth of 33%
driven by volume traction in base business, favorable price benefits in some of our products and
launch of new products. Sequential decline of 16% was primarily on account of reduction in
volumes.
 Revenues from Rest of World (RoW) territories at Rs. 3.9 billion. Year-on-year decline of 6%
primarily on account of higher base in Q1 FY22 due to covid product sales and price decline in
current quarter, partly offset by new product launches. Sequential growth of 36% was largely
attributable to volume traction in our base business, price benefits in some of our markets and
launch of new products.
Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 7.1 billion. Year-on-year and sequential decline of 6% each.
 Year-on-year decline was primarily on account of higher base in Q1 FY22 with covid product sales,
partly offset by new products launched and favorable forex rates.
 Sequential decline was primarily due to lower volumes of base business, partly offset by new
product launches.

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Income Statement Highlights:
 Gross profit margin at 49.9%:

• Decreased by ~230 bps over previous year and by ~300 bps sequentially, primarily on account
  of higher commodity prices, adverse leverage on manufacturing overheads, price erosion and
  forex related impact, which was partially benefited from brand divestment income.
• Gross profit margin for GG and PSAI business segments are at 55.0% and 15.7% respectively.
   Selling, general & administrative (SG&A) expenses at Rs. 15.5 billion, increased by 3% on a year-
  on-year basis and declined by 1% sequentially. Year-on-year increase was primarily attributable to
  investments being done towards marketing of some of our key brands, investments in digitalization
  and annual increments, which was partially offset with lower legal and professional expenses. On
  sequential basis, the expenses have been largely flat.
   Research & development (R&D) expenses at Rs. 4.3 billion. As % to revenues – Q1 FY23: 8.3% | Q4
  FY22: 8.0% | Q1 FY22: 9.2%. Our focus continues on building a global pipeline of products across our
  markets.
   Other operating income at Rs. 6.0 billion compared to Rs. 0.5 billion in Q1 FY22. The increase was
  mainly on account of recognition of income from settlement agreement, with Indivior Inc., Indivior UK
  Limited and Aquestive Therapeutics, Inc., resolving all claims between the parties relating to the
  generic buprenorphine and naloxone sublingual film.
   Net Finance income at Rs. 2.3 billion compared to Rs. 0.7 billion in Q1 FY22. The increase was
  primarily on account of foreign exchange gains due to favorable ruble rates.
   Profit before Tax at Rs. 14.7 billion, increased by 97% year-on-year and increased by 490%
  sequentially.
   Profit after Tax at Rs. 11.9 billion. The effective tax rate is 19.0% for the quarter.
   Diluted earnings per share is at Rs. 71.40.
  Other Highlights:
   EBITDA is at Rs. 17.8 billion and the EBITDA margin is 34.1%.
   Capital expenditure is at Rs. 3.3 billion.
   Free cash-flow is a net outflow of Rs. 2.3 billion.
   Net cash surplus for the company is at Rs. 12.8 billion as on June 30, 2022. Consequently, net debt to
  equity ratio is (0.06).

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Earnings Call Details (06:30 pm IST, 09:00 am EDT, July 28, 2022)
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performance and answer any questions from the participants.
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