Dr.Reddy’s gets thumbs down

about 12 months ago
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Dr.Reddy’s is currently the top loser on the BSE; opening 3.5% lower at Rs.3688, it went down further to Rs.4545, down over 6.5%. Volumes are up almost 5.5x.

The market has put down the stock despite its stellar performance on a YoY though sequentially, one could see the higher base effect come into play. The company posted a 10x or 890% (YoY) surge in consolidated PAT at Rs.959 crore. But QoQ, PAT was down 23%.  The YoY jump is so massive on account of the massive impairment charges it took in Q4FY22.

Also, the company also benefitted from the sale of nine dermatology brands to Eris Lifesciences for Rs 275 crore in Q4FY23.

Revenue was up 16% (YoY) at Rs.6297 crore. The board of the company recommended a final dividend of Rs 40 per share.

The market has flagged down these numbers as they were much below most expectations. Additionally, post these earnings, majority brokerage houses have opted for “reduce” as they feel that the growth is plateauing and expect gRevlimid’s contribution to the overall revenue to only keep coming down. And fund houses have estimated a single-digit organic growth in the current fiscal. With impact of lower base effect vanishing, analysts expect the company to moderate growth as currently, on the anvil, there is very limited visibility of new product deliveries.

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