DR. REDDYS LAB 2022-23 Annual Report Analysis

Tue, 4 Jul

DR. REDDYS LAB has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during FY22-23.

DR. REDDYS LAB Income Statement Analysis

• Operating income during the year rose 14.5% on a year-on-year (YoY) basis.
• The company's operating profit increased by 66.4% YoY during the fiscal. Operating profit margins witnessed a fall and down at 25.9% in FY23 as against 17.8% in FY22.
• Depreciation charges increased by 7.3% and finance costs increased by 49.1% YoY, respectively.
• Other income grew by 117.8% YoY.
• Net profit for the year grew by 106.5% YoY.
• Net profit margins during the year grew from 10.1% in FY22 to 18.3% in FY23.

DR. REDDYS LAB Income Statement 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Net Sales	Rs m	215,452	246,697	14.5%
Other income	Rs m	4,847	10,555	117.8%
Total Revenues	Rs m	220,299	257,252	16.8%
Gross profit	Rs m	38,377	63,860	66.4%
Depreciation	Rs m	11,652	12,502	7.3%
Interest	Rs m	958	1,428	49.1%
Profit before tax	Rs m	30,614	60,485	97.6%
Tax	Rs m	8,789	15,412	75.4%
Profit after tax	Rs m	21,825	45,073	106.5%
Gross profit margin	%	17.8	25.9
Effective tax rate	%	28.7	25.5
Net profit margin	%	10.1	18.3

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DR. REDDYS LAB Balance Sheet Analysis

• The company's current liabilities during FY23 down at Rs 86 billion as compared to Rs 98 billion in FY22, thereby witnessing an decrease of -12.2%.
• Long-term debt down at Rs 1 billion as compared to Rs 6 billion during FY22, a fall of 77.8%.
• Current assets rose 14% and stood at Rs 203 billion, while fixed assets rose 5% and stood at Rs 113 billion in FY23.
• Overall, the total assets and liabilities for FY23 stood at Rs 316 billion as against Rs 285 billion during FY22, thereby witnessing a growth of 11%.

DR. REDDYS LAB Balance Sheet as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	190,691	231,404	21.4
Current Liabilities	Rs m	97,658	85,721	-12.2
Long-term Debt	Rs m	5,746	1,278	-77.8
Total Liabilities	Rs m	284,699	315,799	10.9
Current assets	Rs m	177,879	203,161	14.2
Fixed Assets	Rs m	106,820	112,638	5.4
Total Assets	Rs m	284,699	315,799	10.9

DR. REDDYS LAB Cash Flow Statement Analysis

• DR. REDDYS LAB's cash flow from operating activities (CFO) during FY23 stood at Rs 59 billion, an improvement of 109.5% on a YoY basis.
• Cash flow from investing activities (CFI) during FY23 stood at Rs -41 billion, an improvement of 56.8% on a YoY basis.
• Cash flow from financial activities (CFF) during FY23 stood at Rs -27 billion on a YoY basis.
• Overall, net cash flows for the company during FY23 stood at Rs -9 billion from the Rs 32 million net cash flows seen during FY22.

DR. REDDYS LAB Cash Flow Statement 2022-23

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-22	Mar-23
Cash Flow from Operating Activities	Rs m	28,108	58,875	109.5%
Cash Flow from Investing Activities	Rs m	-26,387	-41,373	-
Cash Flow from Financing Activities	Rs m	-2,422	-26,861	-
Net Cash Flow	Rs m	32	-9,073	-

Current Valuations for DR. REDDYS LAB

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 270.7, an improvement from the EPS of Rs 131.1 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 5,100.4, stands at 19.0 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 3.7 times, while the price to sales ratio stands at 3.4 times.
• The company's price to cash flow (P/CF) ratio stood at 12.2 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Sales per share (Unadj.)	Rs	1,293.8	1,481.4
TTM Earnings per share	Rs	131.1	270.7
Diluted earnings per share	Rs	131.0	270.6
Price to Cash Flow	x	21.4	12.2
TTM P/E ratio	x	33.9	19.0
Price / Book Value ratio	x	4.0	3.0
Market Cap	Rs m	771,744	703,039
Dividends per share (Unadj.)	Rs	30.0	40.0

Ratio Analysis for DR. REDDYS LAB

• Solvency Ratios

Current Ratio: The company's current ratio improved and stood at 2.4x during FY23, from 1.8x during FY22. 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 43.4x during FY23, from 33.0x during FY22. 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 improved and stood at 19.5% during FY23, from 11.4% during FY23. 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 26.6% during FY23, from 16.1% during FY22. 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 improved and stood at 14.7% during FY23, from 8.0% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Current ratio	x	1.8	2.4
Debtors’ Days	Days	113	107
Interest coverage	x	33.0	43.4
Debt to equity ratio	x	0.0	0.0
Return on assets	%	8.0	14.7
Return on equity	%	11.4	19.5
Return on capital employed	%	16.1	26.6

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 4,365.7 to Rs 5,100.4, registering a gain of Rs 734.7 or around 16.8%.

Meanwhile, the S&P BSE HEALTHCARE Index is trading at Rs 25,627.6 (down 0.7%). Over the last one year it has moved up from 21,735.9 to 25,627.6, a gain of 3,892 points (up 17.9%).

Overall, the S&P BSE SENSEX is up 23.0% over the year.

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