X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Dr Reddy's: Major Business Segments Come Under Pressure - Views on News from Equitymaster
StockSelect
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  
  • Home
  • Outlook Arena
  • Sep 12, 2016 - Dr Reddy's: Major Business Segments Come Under Pressure

Dr Reddy's: Major Business Segments Come Under Pressure
Sep 12, 2016

Dr Reddy's has announced the results for first quarter of FY17 (1QFY17). The company has reported decline in the sales by 13.9% YoY while net profits declined by 79.8 % YoY. Here is our analysis of the results.

Performance summary
  • Topline declined by 13.9% YoY during the quarter. All the major business segments witnessed decline. North America declined by 16% YoY. Decline in sales was largely because of competition in Vidaza and Valcyte. Dr Reddy's had captured good market share in both the drugs. On the other hand, even emerging markets too faced subdued growth. Company has stopped supplies in Venezuela market. Dr Reddy is also facing headwinds in emerging markets like Russia and CIS. Over and above, domestic business too witnessed 10% YoY growth. Excluding UCB, (acquired business), organic growth in the domestic market stood at 5% YoY. Further supply contract to McNeil for supply of API also expired. Consequently, PSAI segment also declined during the quarter.
  • Operating profits too declined steeply, by 61.7% YoY, leading to sharp plunge in the operating margins. Remediation expenses on facilities, loss of sales in key markets, high R&D expenses led impacted the company's operating income.
  • Owing to poor operating performance, company's profits declined by 79.8% YoY.

    Financial Performance : A snapshot
    (Rs m) 1QFY16 1QFY17 Change
    Net sales 37,578 32,345 -13.9%
    Expenditure 27,723 28,572 3.1%
    Operating profit (EBIDTA) 9,855 3,773 -61.7%
    EBIDTA margin (%) 26.2% 11.7%
    Other income 125 96 -23.1%
    Interest (net) -216 -445
    Depreciation 2,268 2,681 18.2%
    Profit before tax 7,928 1,633 -79.4%
    Tax 1,721 444 -74.2%
    Share of Profit to equity affiliates 49 74 50.4%
    Profit after tax/(loss) 6,257 1,263 -79.8%
    Net profit margin (%) 16.7% 3.9%
    No. of shares (m) 166
    Diluted earnings per share (Rs) 96
    Price to earnings ratio (x)* 32.83

    *based on trailing 12 months earnings

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report.
  2. Neither Equitymaster, Research Analyst or his/her relative have any financial interest in the subject company.
  3. Equitymaster's Associate has financial interest in DrReddy's Laboratories Ltd.
  4. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  5. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the subscriber could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the subscriber could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the subscriber should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the subscriber could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

DR. REDDYS LAB SHARE PRICE


Aug 22, 2017 (Close)

TRACK DR. REDDYS LAB

  • Track your investment in DR. REDDYS LAB with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

DR. REDDYS LAB - DR. DATSONS LABS COMPARISON

Compare Company With Charts

COMPARE DR. REDDYS LAB WITH

MARKET STATS