Dr. Reddy’s Laboratories Ltd. (BSE: 500124 | NSE: DRREDDY |
NYSE: RDY) today announced its consolidated financial results for
the quarter and the half year ended September 30, 2020. The
information mentioned in this release is on the basis of
consolidated financial statements under International Financial
Reporting Standards (IFRS).
Q2 Performance
Summary
H1 Performance
Summary
Rs. 4,897 Cr
Rs. 9,314 Cr
Revenue
Revenue
[Up: 11% QoQ; 2% YoY]
[Up: 8% YoY]
53.9%
54.9%
Gross Margin
Gross Margin
[Q1 FY21: 56.0%; Q2 FY20: 57.5%]
[H1 FY20: 54.9%]
Rs.1,311 Cr
Rs. 2,589 Cr
SGNA expenses
SGNA expenses
[Up: 3% QoQ; Down: 1% YoY]
[Up: 2% YoY]
Rs. 436 Cr
Rs. 834 Cr
R&D expenses
R&D expenses
[8.9% of Revenues]
[9.0% of Revenues]
Rs. 1,267 Cr
Rs. 2,430 Cr
EBITDA
EBITDA
[Up: 9% QoQ; Down: 12% YoY]
[Down: 5% YoY]
Rs. 862 Cr
Rs. 1,741 Cr
Profit before Tax
Profit before Tax
[Down: 2% QoQ; Up: 12% YoY]
[Up: 8% YoY]
Rs. 762 Cr
Rs. 1,342 Cr
Profit after Tax
Profit after Tax
[Up: 32% QoQ; Down: 30% YoY]
[Down: 24% YoY]
*Q2 FY21 YoY sales growth of 20% adjusted for proprietary
products out-licensing income in previous year
Commenting on the results, Co-chairman & MD, G V Prasad
said, “We are pleased to report continued growth across all the
markets and improved productivity which is reflected in the healthy
EBITDA margin and RoCE. Our research teams are working on several
potential remedies for COVID in addition to the already launched
products.”
All amounts in millions, except EPS. All US dollar amounts based
on convenience translation rate of I USD = Rs. 73.54
Dr.
Reddy’s Laboratories Limited and Subsidiaries
Consolidated Income
Statement
Particulars
Q2 FY21
Q2 FY20
YoY Gr %
Q1 FY21
QoQ Gr%
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Revenues
666
48,967
653
48,009
2
601
44,175
11
Cost of Revenues
307
22,558
277
20,389
11
264
19,420
16
Gross Profit
359
26,409
376
27,620
(4)
337
24,755
7
Operating Expenses
Selling, General & Administrative
expenses
178
13,107
180
13,217
(1)
174
12,786
3
Research and Development expenses
59
4,359
50
3,662
19
54
3,980
10
Impairment of non-current assets
11
781
48
3,560
(78)
Other operating income
(2)
(149)
(2)
(135)
10
(2)
(118)
26
Results from operating
activities
113
8,311
99
7,316
14
110
8,107
3
Net finance income
(3)
(237)
(3)
(231)
3
(8)
(605)
(61)
Share of profit of equity accounted
investees
(1)
(73)
(2)
(117)
(38)
(1)
(77)
(5)
Profit before income tax
117
8,621
104
7,664
12
120
8,789
(2)
Income tax
13
998
(44)
(3,261)
(131)
41
2,996
(67)
Profit for the period
104
7,623
149
10,925
(30)
79
5,793
32
Diluted Earnings Per Share
(EPS)
0.62
45.83
0.90
65.82
(30)
0.47
34.86
31
As a % to revenues
Q2 FY21
Q2 FY20
Q1 FY21
Gross Profit
53.9
57.5
56.0
SG&A
26.8
27.5
28.9
R&D
8.9
7.6
9.0
EBITDA
25.9
29.9
26.3
PBT
17.6
16.0
19.9
PAT
15.6
22.8
13.1
EBITDA Computation
Particulars
Q2 FY21
Q2 FY20
Q1 FY21
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Profit before Income Tax
117
8,621
104
7,664
120
8,789
Interest income (net)*
(0)
(1)
(3)
(226)
(4)
(306)
Depreciation
30
2,188
31
2,306
29
2,120
Amortization
15
1,084
14
1,033
14
1,020
Impairment
11
781
48
3,560
EBITDA
172
12,673
195
14,337
158
11,622
* Includes income from Investments
All amounts in millions, except EPS. All US dollar amounts based
on convenience translation rate of I USD = Rs. 73.54
Key Balance Sheet
Items
Particulars
As on 30th Sep 2020
As on 30th Jun 2020
As on 30th Sep 2019
($)
(Rs.)
($)
(Rs.)
($)
(Rs.)
Cash and cash equivalents and other
investments
355
26,074
384
28,227
414
30,446
Trade receivables (current &
non-current)
684
50,335
657
48,316
573
42,153
Inventories
559
41,134
532
39,148
476
35,033
Property, plant and equipment
748
55,026
737
54,183
721
53,008
Goodwill and Other Intangible assets
619
45,553
625
45,991
603
44,340
Loans and borrowings (current &
non-current)
373
27,429
429
31,582
429
31,545
Trade payables
310
22,833
259
19,038
210
15,434
Equity
2,248
1,65,337
2,199
1,61,748
2,092
1,53,816
Revenue Mix by Segment
Particulars
Q2 FY21
Q2 FY20
YoY Growth %
Q1 FY21
QoQ Growth %
(Rs.)
(Rs.)
(Rs.)
Global Generics
39,841
32,816
21%
35,075
14%
North America
18,328
14,265
28%
17,282
6%
Europe
3,754
2,764
36%
3,551
6%
India
9,123
7,511
21%
6,260
46%
EM
8,636
8,276
4%
7,982
8%
Pharmaceutical Services and Active
Ingredients (PSAI)
8,505
7,107
20%
8,553
(1%)
Proprietary Products &
Others
621
8,086
(92%)
547
14%
Total
48,967
48,009
2%
44,175
11%
Cyber Attack Update
On 22nd October 2020, we experienced an information security
incident and consequently isolated the impacted IT services. This
incident involved a ransom-ware attack. We promptly engaged leading
outside cybersecurity experts, launched a comprehensive containment
and remediation effort and investigation to address the
incident.
As of date, our investigation has not ascertained if any data
breaches in the incident pertain to personally identifiable
information stored in the Company's systems.
Recovery and restoration of all applications and data is
underway. All critical operations are being enabled in a controlled
manner.
COVID-19 Update
We continue our fight against the current pandemic by ensuring
health and safety of our employees and business partners by
adopting adequate precautionary measures. We continued our
operations across plants enabling us to serve our patients across
markets.
During the quarter we saw gradual recovery in the market demand
across India, Russia and other markets after a low demand in Q1 FY
21, although the demand is yet to fully recover to pre-covid
levels.
We launched COVID-19 treatment drugs Avigan (Favipiravir) and
Remdesivir. We further strengthened our development pipeline for
COVID-19 treatment drugs including the vaccine candidate Sputnik
V.
Revenue Analysis
Global Generics (GG)
Revenues from GG segment at Rs. 39.8 billion:
- Year-on-year growth of 21% and sequential quarter growth of
14%, were driven primarily on account of new product launches,
volume traction in the base business and integration of the
acquired business from Wockhardt in India.
North America
Revenues from North America at Rs. 18.3 billion:
- Year-on-year growth of 28%, driven by contribution from new
products launched, increase in volumes of our base products and
aided by a favorable forex rate, which was partially offset by
price erosion.
- Sequential growth of 6%, on account of volume traction in the
base business and new product launches, offset by adverse forex
movement and price erosion.
- We launched nine new products including Ciprofloxacin &
Dexamethasone Otic Suspension, Fulvestrant Injection, OTC
Diclofenac and OTC Olapatadine.
- We filed two new ANDAs during the quarter. As of 30th September
2020, cumulatively 94 generic filings are pending for approval with
the USFDA (92 ANDAs and 2 NDAs under 505(b)(2) route). Of the 92
ANDAs, 50 are Para IVs and we believe 26 have ‘First to File’
status.
Europe
Revenues from Europe at Rs. 3.8 billion:
- Year-on-year growth of 36% and sequential growth of 6%,
primarily on account of new product launches and favorable forex
movement.
- We also forayed into a new country Austria, beyond our EU5
markets.
India
Revenues from India at Rs. 9.1 billion:
- Year-on-year growth of 21% and sequential growth of 46% is
primarily on account of revenues from the acquired business of
Wockhardt and contribution from new products including the Avigan
(Favipiravir) and Remdesivir launched for treatment of
Covid-19.
Emerging Markets
Revenues from Emerging Markets at Rs. 8.6 billion.
Year-on-year growth of 4%. Sequential growth of 8%:
- Revenues from Russia at Rs. 4.0billion. Year-on-year
decline of 3% is primarily on account of weakening Ruble.
Sequential growth of 22% contributed by increased volumes with a
gradual recovery in market demand after Q1 was impacted due to
COVID-19.
- Revenues from other CIS countries and Romania market at
Rs. 2.0 billion. Year-on-year growth of 19% and sequential growth
of 43% driven by both base business and new product launches.
- Revenues from Rest of World (RoW) territories at Rs.
2.7billion. Year-on-year growth of 7% driven by new products.
Sequential decline of 20% is on account of lower volumes sold for
existing products.
Pharmaceutical Services and Active Ingredients (PSAI)
Revenues from PSAI at Rs. 8.5 billion:
- Year-on-year growth of 20% driven by new products, growth in
the services business and favorable forex rate.
- Sequential decline of 1% on account of lower volumes of certain
products, partially offset by new products and growth in the
services business.
- During the quarter we filed DMF for one product in the US.
Proprietary Products (PP) & Others
Revenues from PP & Others at Rs. 622 million:
- Year-on-year decline of 92%. Q2 FY 20 was higher due to income
from sale of the US and select territory rights for two of
Neurology franchise products pertaining to PP.
- Sequential growth of 14%.
Income Statement Highlights:
- Gross profit margin at 53.9%:
- Decline of 360 bps over previous year, which was impacted due
to inclusion of revenue from sale of Neurology franchise products
in the previous year, partially offset by improvement in
productivity and favorable forex rates. Sequentially the margin
reduced by 210 bps, primarily on account of lower export
incentives, adverse forex and product mix.
- Gross profit margin for GG and PSAI business segments are at
59.4% and 26.8% respectively.
- SG&A expenses at Rs. 13.1 billion, reduced by 1%
year-on-year due to certain one-off expenses last year, which was
partly offset by incremental costs post the integration of the
acquired divisions from Wockhardt in this year. Sequentially it
increased by 3% primarily due to the integration of the acquired
divisions from Wockhardt and pickup in sales & marketing
activities post un-lock.
- R&D expenses at Rs. 4.4 billion. As % to revenues
these are: Q2 FY21: 8.9% | Q1 FY 21: 9.0% | Q2 FY20: 7.6%. Our
focus continues on building a healthy pipeline of new products
across our markets including development of products pertaining to
COVID-19 treatment.
- Other operating income at Rs. 149 million compared to
Rs. 135 million in Q2 FY20.
- Net Finance income at Rs. 237 million compared to Rs.
231 million in Q2 FY20.
- Profit before Tax at Rs. 8.6 billion, increased by 12%
year-on-year and reduced by 2% sequentially.
- Profit after Tax at Rs. 7.6 billion. The effective tax
rate is ~ 11.6% for the quarter, which is lower primarily due to
recognition of deferred tax assets for one of our
subsidiaries.
- Diluted earnings per share is at Rs. 45.83.
Other Highlights:
- EBITDA at Rs. 12.7 billion and the EBITDA margin is
25.9%.
- Capital expenditure is at Rs. 2.5 billion.
- Free cash-flow generated during the quarter stood at Rs.
6.0 billion.
- Net debt of the company is at Rs. 1.4 billion as on
September 30, 2020. Consequently, net debt to equity ratio is
0.01.
Earnings Call Details (05:30 pm IST, 08:00 am EDT, Oct 28,
2020)
The management of the Company will host an earnings call to
discuss the Company’s financial performance and answer any
questions from the participants.
Conference Joining Information
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Universal Access Number:
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Local Access Number:
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International Toll Free Number:
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UK: 0 808 101 1573
Singapore: 800 101 2045
Hong Kong: 800 964 448
No password/pin number is necessary to dial in to any of the
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questions before and during the call.
Play Back: The play back will be available after the
earnings call, till November 4th, 2020. For play back dial in phone
No: +91 22 7194 5757 | +91 22 6663 5757, and Playback Code is
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Transcript: Transcript of the Earnings call will be
available on the Company’s website: www.drreddys.com
About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (BSE:
500124, NSE: DRREDDY, NYSE: RDY) is an integrated pharmaceutical
company, committed to providing affordable and innovative medicines
for healthier lives. Through its three businesses - Pharmaceutical
Services & Active Ingredients, Global Generics and Proprietary
Products – Dr. Reddy’s offers a portfolio of products and services
including APIs, custom pharmaceutical services, generics,
biosimilars and differentiated formulations. Our major therapeutic
areas of focus are gastrointestinal, cardiovascular, diabetology,
oncology, pain management and dermatology. Dr. Reddy’s operates in
markets across the globe. Our major markets include – USA, India,
Russia & CIS countries, and Europe. For more information, log
on to: www.drreddys.com
Disclaimer: This press release may include statements of future
expectations and other forward-looking statements that are based on
the management’s current views and assumptions and involve known or
unknown risks and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or
implied in such statements. In addition to statements which are
forward-looking by reason of context, the words "may", "will",
"should", "expects", "plans", "intends", "anticipates", "believes",
"estimates", "predicts", "potential", or "continue" and similar
expressions identify forward-looking statements. Actual results,
performance or events may differ materially from those in such
statements due to without limitation, (i) general economic
conditions such as performance of financial markets, credit
defaults , currency exchange rates , interest rates , persistency
levels and frequency / severity of insured loss events (ii)
mortality and morbidity levels and trends, (iii) changing levels of
competition and general competitive factors, (iv) changes in laws
and regulations and in the policies of central banks and/or
governments, (v) the impact of acquisitions or reorganization ,
including related integration issues, (vi) the susceptibility of
our industry and the markets addressed by our, and our customers’,
products and services to economic downturns as a result of natural
disasters, epidemics, pandemics or other widespread illness,
including coronavirus (or COVID-19), and (vii) other risks and
uncertainties identified in our public filings with the Securities
and Exchange Commission, including those listed under the "Risk
Factors" and "Forward-Looking Statements" sections of our Annual
Report on Form 20-F for the year ended March 31, 2020. The company
assumes no obligation to update any information contained
herein.
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INVESTOR RELATIONS AMIT AGARWAL amita@drreddys.com (Ph:
+91-40-4900 2135)
MEDIA RELATIONS APARNA TEKURI aparnatekuri@drreddys.com
(Ph: +91-40-4900 2446)
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