DR REDDY’S LABORATORIES
Dr Reddy’s has recorded a 29 per cent growth in revenues at Rs 351.66 crore (Rs 272.16 crore) for the first quarter ended June. Against this the total spending of the company has gone up by 24 per cent to Rs 271.52 crore (Rs 218.66 crore) resulting in net profit improving by 50 per cent to Rs 80.14 crore (Rs 53.50 crore).
The problem is, this was achieved on the back of sequentially declining profits. Net sales at Rs 335.04 crore (Rs 263.60 crore) was up 27 per cent over the previous corresponding quarter. This was primarily fuelled by continued exports of fluoxetine to the US market.
Exports accounted for as much as 62 per cent of the total turnover, which grew by close to 77 per cent over the previous corresponding quarter.
The domestic market, which brought in close to 37 per cent of the total sales grew by 22 per cent with branded formulation sales growing by 13 per cent followed by bulk drugs, which were up 37 per cent over the previous corresponding quarter. At Rs 241.22 crore (Rs 198.22 crore) operational costs were up by 22 per cent, the increase being primarily on account of a 103 per cent jump in the R&D cost which stood at Rs 21.33 crore (Rs 10.52 crore). That apart, staff cost went up by 41 per cent to Rs 29.63 crore (Rs 21.02 crore) and other expenditure was up 124 per cent.
Selling cost declined by 18 per cent. DRL’s margins improved with operating profits registering a 43 per cent rise over the previous corresponding period to Rs 93.82crore (Rs 65.38 crore).
OPM, however, managed a rise of 3 percentage points to 28 per cent from 25 per cent during the year-ago period. Other income at Rs 16.62 crore (Rs 8.56 crore) was up by 94 per cent over the previous corresponding quarter while interest cost came down by 72 per cent over last year to Rs 1.38 crore (Rs 4.99 crore). Depreciation was up 22 per cent to Rs 13.66 crore (Rs 11.24 crore).
Net profits was down 21 per cent over the March quarter profits of Rs 101.18 crore. The counter was badly hurt recently especially after the company announced suspension of clinical trials in Ragaglitazar.
Currently trading at around Rs 865 the stock discounts the June quarter annualised EPS of Rs 41.89 by 20 times. That’s a reasonable valuation for a company with a long list of filings for off-patent drugs in the pipeline.