Dr Reddy's Q4 preview: Profit to rise 37% YoY to Rs 413cr; EBITDA margin may touch 23%

Narnolia Financial Advisors expects the pharma company to report a net profit of Rs 545 crore as against Rs 500 crore in the last quarter

Dr. Reddy's Laboratories is slated to come out with its fourth-quarter earnings on May 17. Kotak Institutional Equities expects the pharma major to report a net profit of Rs 413.6 crore, up 36.9 percent year-on-year and down 14.8 percent quarter-on-quarter. Sales are expected to increase 7.7 percent YoY (down 1.1 percent QoQ) to Rs 3,807.5 crore.


Earnings before interest, tax, depreciation, and amortization (EBITDA) is likely to rise 42.6 percent YoY (down 3.7 percent QoQ) to Rs 785.5 crore.

The research firm expects the US business to grow $10 million QoQ, given the benefits of Propofol and Suboxone launches, but the same could be offset by continued erosion in Metoprolol sales. It forecasts 13 percent YoY growth for India and Russia/CIS 17 percent, with CIS benefiting from a favorable base effect as well. Rest of the World is expected to grow at 27 percent. Proprietary products, it said, will continue its sluggish trend, with only six percent QoQ growth off a low base.

Narnolia Financial Advisors expects the pharma company to report a net profit of Rs 545 crore as against Rs 500 crore in the last quarter. It expects revenue from the US business to increase nine percent QoQ to $243 million in Q4 FY19 on account of improvement in the base business and re-launch of the generic version of Suboxone in the US market.

It forecasts an improvement in Europe revenue on the back of improvement in supplies and new launches. Revenue from the emerging market will witness traction on healthy performance from Russia based on new launches, it said.

EBITDA margin may clock 23.4 percent growth on account of reduced R&D expenditure and other expenses in comparison to the previous year due to control on spends. The latter is on the back of cost optimization and productivity improvement initiatives, the report said.

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