DR. REDDYS LAB 2020-21 Annual Report Analysis

Wed, 31 Mar

DR. REDDYS LAB has announced its results for the year ended March 2021. Let us have a look at the detailed performance review of the company during FY20-21.

DR. REDDYS LAB Income Statement Analysis

• Operating income during the year rose 8.7% on a year-on-year (YoY) basis.
• The company's operating profit increased by 56.7% YoY during the fiscal. Operating profit margins witnessed a fall and down at 20.3% in FY21 as against 14.1% in FY20.
• Depreciation charges increased by 5.6% and finance costs decreased by 1.3% YoY, respectively.
• Other income declined by 53.0% YoY.
• Net profit for the year declined by 3.4% YoY.
• Net profit margins during the year declined from 11.2% in FY20 to 10.0% in FY21.

DR. REDDYS LAB Income Statement 2020-21

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Net Sales	Rs m	175,170	190,475	8.7%
Other income	Rs m	6,206	2,914	-53.0%
Total Revenues	Rs m	181,376	193,389	6.6%
Gross profit	Rs m	24,704	38,699	56.7%
Depreciation	Rs m	11,631	12,288	5.6%
Interest	Rs m	983	970	-1.3%
Profit before tax	Rs m	18,296	28,355	55.0%
Tax	Rs m	-1,403	9,319	-764.2%
Profit after tax	Rs m	19,699	19,036	-3.4%
Gross profit margin	%	14.1	20.3
Effective tax rate	%	-7.7	32.9
Net profit margin	%	11.2	10.0

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DR. REDDYS LAB Balance Sheet Analysis

• The company's current liabilities during FY21 stood at Rs 81 billion as compared to Rs 72 billion in FY20, thereby witnessing an increase of 12.3%.
• Long-term debt stood at Rs 6 billion as compared to Rs 1 billion during FY20, a growth of 383.1%.
• Current assets rose 15% and stood at Rs 146 billion, while fixed assets rose 17% and stood at Rs 110 billion in FY21.
• Overall, the total assets and liabilities for FY21 stood at Rs 255 billion as against Rs 220 billion during FY20, thereby witnessing a growth of 16%.

DR. REDDYS LAB Balance Sheet as on March 2021

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*	% Change
Networth	Rs m	154,950	175,151	13.0
Current Liabilities	Rs m	72,141	81,038	12.3
Long-term Debt	Rs m	1,304	6,299	383.1
Total Liabilities	Rs m	220,054	255,482	16.1
Current assets	Rs m	125,991	145,503	15.5
Fixed Assets	Rs m	94,063	109,979	16.9
Total Assets	Rs m	220,054	255,482	16.1

DR. REDDYS LAB Cash Flow Statement Analysis

• DR. REDDYS LAB's cash flow from operating activities (CFO) during FY21 stood at Rs 36 billion, an improvement of 19.6% on a YoY basis.
• Cash flow from investing activities (CFI) during FY21 stood at Rs -23 billion, an improvement of 360.3% on a YoY basis.
• Cash flow from financial activities (CFF) during FY21 stood at Rs -298 million, an improvement of 99% on a YoY basis.
• Overall, net cash flows for the company during FY21 stood at Rs 13 billion from the Rs -266 million net cash flows seen during FY20.

DR. REDDYS LAB Cash Flow Statement 2020-21

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-20	Mar-21
Cash Flow from Operating Activities	Rs m	29,841	35,703	19.6%
Cash Flow from Investing Activities	Rs m	-4,923	-22,660	-
Cash Flow from Financing Activities	Rs m	-25,159	-298	-
Net Cash Flow	Rs m	-266	12,858	-

Current Valuations for DR. REDDYS LAB

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 114.5, an decline from the EPS of Rs 118.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 4,515.6, stands at 39.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 4.3 times, while the price to sales ratio stands at 3.9 times.
• The company's price to cash flow (P/CF) ratio stood at 22.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Sales per share (Unadj.)	Rs	1,054.2	1,145.4
TTM Earnings per share	Rs	118.5	114.5
Diluted earnings per share	Rs	118.4	114.4
Price to Cash Flow	x	16.6	22.7
TTM P/E ratio	x	26.3	39.5
Price / Book Value ratio	x	3.1	4.1
Market Cap	Rs m	474,837	710,289
Dividends per share (Unadj.)	Rs	25.0	25.0

Ratio Analysis for DR. REDDYS LAB

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 1.8x during FY21, from 1.7x during FY20. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio improved and stood at 30.2x during FY21, from 19.6x during FY20. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company declined and down at 10.9% during FY21, from 12.7% during FY21. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 16.2% during FY21, from 12.3% during FY20. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company declined and down at 7.8% during FY21, from 9.4% during FY20. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-20*	12 Mar-21*
Current ratio	x	1.7	1.8
Debtors’ Days	Days	105	95
Interest coverage	x	19.6	30.2
Debt to equity ratio	x	0.0	0.0
Return on assets	%	9.4	7.8
Return on equity	%	12.7	10.9
Return on capital employed	%	12.3	16.2

To see how DR. REDDYS LAB has performed over the last 5 years, please visit here.

DR. REDDYS LAB Share Price Performance

Over the last one year, DR. REDDYS LAB share price has moved up from Rs 3,117.1 to Rs 4,515.6, registering a gain of Rs 1,398.5 or around 44.9%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 21,328.2 (up 0.4%). Over the last one year it has moved up from 12,148.6 to 21,328.2, a gain of 9,180 points (up 75.6%).

Overall, the S&P BSE SENSEX is up 74.1% over the year.

(To know more, check out historical annual results for DR. REDDYS LAB and quarterly results for DR. REDDYS LAB)

Read: Latest Annual Report Analysis of DR. REDDYS LAB