Dr Reddy's Second Quarter Profit sinks 60 per cent

FMCG major Dr Reddy's Laboratories said that the second quarter consolidated net profit plunged 60.1 per cent year-on-year to Rs 309 crores on weak operational performance but sequential performance was quite strong. Revenue during the quarter declined 10.1 per cent to Rs 3,616.3 crores on yearly basis, dented by US and emerging markets business. However, sequentially the same grew by 11.5 per cent.

"All major businesses have shown sequential improvement over the previous quarter with revenues growing 11 per cent and EBITDA by 61 per cent. We have made considerable progress in our remediation efforts and continue to work on addressing concerns of the regulators," GV Prasad, co-chairman and CEO said in its filing.

Earnings more or less were expected to be weak by the experts. Profit was estimated at Rs 298 crores on revenue of Rs 3,426 crores for the quarter, according to average of estimates of analysts polled by the market analysts. Dr Reddy's Labs global generics business declined 12 per cent Year on year as North America, which contributes 45 per cent to total business, showed a 13 per cent de-growth (but up 4 per cent Quarter on quarter), Europe business fell 16 per cent (up 10 per cent Quarter on quarter) and emerging markets declined 27 per cent.

PSAI (pharmaceuticals services and active ingredients) business also recorded a fall of 2 per cent during the quarter (up 23 per cent Quarter on quarter) but within that only North America showed a 64 per cent growth. India business outperformed, growing 14 per cent in Q2 on yearly basis and 20 per cent sequentially.

EBITDA (earnings before interest, tax, depreciation and amortisation) fell 43.9 per cent to Rs 640 crores and margin contracted by 1050 basis points to 17.9 per cent compared with year-ago period. Other income too was down at Rs 43.8 crores in July-September quarter against Rs 72.4 crores in year-ago period.Dr Reddys share price is currently trading at Rs 3,147.00, up by 1.87 per cent.