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: Stellar Performance - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Nov 1, 2001

    Dr. Reddy's: Stellar Performance

    Dr. Reddy has recorded an exciting 104% growth in sales and a 420% growth in profit before tax for 2QFY02. Operating margins have leapfrogged to 49.4% in the concerned quarter from 25.9% last year. The performance of the company is much above market expectations. The figures for the current quarter is on a consolidated basis with Cheminor drugs and American Remedies. To provide meaningful comparison, previous quarter numbers are also on a consolidated basis. The surge in revenues and profits was mainly fuelled by generic fluoxetine and other export formulations.

    (Rs m) 2QFY01 2QFY02 % change 1HFY01 1HFY02 % Change
    Sales 2,429 4,943 103.5% 4,575 7,782 70.1%
    Other Income 82 204 149.5% 153 290 89.9%
    Expenditure 1,799 2,501 39.0% 3,535 4686 32.5%
    Operating Profit (EBDIT) 630 2,442 287.7% 1,040 3,096 197.8%
    Operating Profit Margin (%) 25.9% 49.4%   22.7% 39.8%  
    Interest 118 14 -87.9% 232 64 -72.3%
    Depreciation 111 122 9.4% 197 234 19.1%
    Profit before Tax 483 2,510 420.1% 764 3,087 304.0%
    Extraordinary Exp/(Income) - 1,083   - 1,083  
    Tax Provision/(Deferred benefit) net 55 -8 -114.5% 87 34 -61.1%
    Profit after Tax/(Loss) 427 1,435 235.9% 677 1,970 191.1%
    Net profit margin (%) 17.6% 29.0% 14.8% 25.3%
    No. of Shares (eoy) (m) 74.0 74.0   74.0 74.0  
    Fully Diluted Earnings per share* 23.1 77.6   18.3 53.2  
    P/E (at current price) 21.8   31.7  
    (**- annualised)            

    The current quarter witnessed a marked shift in the business mix of the company. Generics business which started with modest sales in 1QFY02 contributed more than 39% of the total turnover. This was mainly fuelled by fluoxetine 40 mg capsules contributing around 35% to the total turnover of the company i.e Rs 1,639 m (US$ 35 m). It may be recalled that Dr. Reddy's received a para IV certifications (which entitles the company to have 180 days generic marketing exclusivity) for fluoxetine in last quarter. The current quarter seems to reflect 60 days (of the 180 days exclusivity) of generic fluoxetine sales. The 180-day marketing exclusivity for Fluoxetine runs between August 2001 and February 2002. The conversion rate for fluoxetine i.e. switch from branded Prozac has been on a steep rise in the last two months and currently stands at around 80%. i.e. 80% of total prescribed sales of the drug in the US is marketed by Dr. Reddy's. The company has recently also received final approval for marketing famotidine and Enalapril tablets in the US. Dr. Reddy's now has a total of 14 ANDA filings including 5 Para IV certifications.

    The company also received Rs 236 m (US$ 5 m) from Novartis as upfront payment for the licensing of its diabetic molecule which has been included in the sales revenues.Excluding one time receipt for upfront payment and sales of fluoxetine, revenues have jumped 26%. Domestic formulations sales grew by 7% more or less in line with domestic pharma market growth.

    Dr. Reddy's is currently trading at Rs 1,115 on 1HFY02 annualised earnings multiple of 21x. It may be noted however, that the sales of fluoxetine for last two months should not be taken as indicative of next four months exclusivity sales. The sales of the drug are through the company's marketing tie-up with Par Laboratories. It may be the case that Par Laboratories may have stocked up the drug in anticipation of sales. We would be revising our earnings estimates shortly inview of milestone payment receipt and bigger breakthrough in the generics market.

    The company has also declared a special interim dividend of 100% I.e. Rs 5 per share.



    Equitymaster requests your view! Post a comment on "Dr. Reddy's: Stellar Performance". Click here!


    More Views on News

    Dr Reddy's: US Pressure Continues to Haunt (Quarterly Results Update - Detailed)

    Aug 8, 2017

    Profits plunge due to higher raw material costs.

    Dr Reddy's: Major Business Segments Come Under Pressure (Quarterly Results Update - Detailed)

    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.

    Sun Pharma: Bottomline Slips into the Red Amidst Challenging Environment (Quarterly Results Update - Detailed)

    Aug 14, 2017

    A challenging environment and one-time expense pushes Sun Pharma into a loss in the first quarter.

    Lupin: Bigger Challenges or Bigger Margin of Safety? (Quarterly Results Update - Detailed)

    Aug 14, 2017

    GST impact coupled with price erosion in US leads to lower profits for the quarter.

    Biocon: Lower Licensing Income Leads to Muted Growth for the Quarter (Quarterly Results Update - Detailed)

    Jun 23, 2017

    Net Profit lower due to exceptional items in the previous year.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    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


    Aug 18, 2017 (Close)


    • 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


    Detailed Financial Information With Charts