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Dr Reddy's: Good show but challenges persist - Views on News from Equitymaster
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Dr Reddy's: Good show but challenges persist
Nov 16, 2015

Dr Reddy's has announced its 2QFY16 results. The company has reported 11.2% YoY growth in sales and 25.7% YoY growth in net profits. Here is our analysis of the results.

Performance summary

  • Net sales grow by 11.2% YoY during the quarter led by growth in the global generics segment. However, growth in its PSAI segment declines during the quarter.
  • Operating margins surge 5.9% to 28.6% in 2QFY16 largely due to superior product mix leading to better gross margins.
  • On the back of healthy operating performance, the bottom line increases by 25.7% YoY.

Financial Performance : A snapshot

(Rs m) 2QFY15 2QFY16 Change 1HFY15 1HFY16 Change
Net sales 35,878 39,889 11.2% 71,053 77,467 9.0%
Expenditure 27,721 28,486 2.8% 54,734 56,209 2.7%
Operating profit (EBDITA) 8,157 11,403 39.8% 16,319 21,259 30.3%
EBDITA margin (%) 22.7% 28.6%   23.0% 27.4%  
Other income 266 -   450 125 -72.3%
Interest (net) (421) (216) -48.6% (902) (433) -52.0%
Depreciation 1,957 2,466 26.0% 3,829 4,734 23.6%
Profit before tax 6,887 9,154 32.9% 13,842 17,082 23.4%
Tax 1,196 1,879 57.1% 2,701 3,600 33.3%
Share of Profit to equity affiliates 54 (56) -204.3% 107 (7)  
Profit after tax/(loss) 5,741 7,219 25.7% 11,248 13,475 19.8%
Net profit margin (%) 16.0% 18.1%   15.8% 17.4%  
No. of shares (m)         171  
Diluted earnings per share (Rs)         143  
Price to earnings ratio (x)*         24  

*based on trailing 12 months earnings

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