Dr. Reddy’s Q3 & 9MFY25 Financial Results

India

• Q3FY25 revenues at ₹13.5 billion, YoY growth of 14% and QoQ decline of 4%.
• 9MFY25 revenues at ₹40.7 billion, YoY growth of 16%.

  Growth was led by revenues from the in-licensed vaccine portfolio, new product launches as well as price increases, partially offset by lower volume pick-up in certain brands in Cardiac and Gastro-intestinal therapy areas.

• As per IQVIA, our IPM rank was maintained at 10. During the quarter, we launched six new brands in the country, taking the year-to-date total to 22.

Emerging Markets

• Q3FY25 revenues at ₹14.4 billion, YoY growth of 12% and flat QoQ. YoY growth is attributable to market share expansion as well as new product launches.

– Revenues from Russia at ₹7.0 billion, YoY growth of 19% and QoQ growth of 2%. YoY growth was due to higher volumes, price increase and new product launches, partially offset by adverse forex movement.

– Revenues from other Commonwealth of Independent States (CIS) countries and Romania at ₹2.4 billion, YoY growth of 4% and QoQ growth of 13%. YoY growth was due to higher prices and contribution from new product launches, partially offset by adverse forex movement. QoQ growth was primarily on account of higher base business volumes.

– Revenues from Rest of World (RoW) territories at ₹4.9 billion, YoY growth of 7% YoY and QoQ decline of 11%. YoY growth was primarily due to contribution from new product launches, partially offset by adverse forex movement. QoQ decline was largely due to decrease in base business volumes.

• 9MFY25 revenues at ₹40.8 billion, YoY growth of 12%. The growth is attributable to market share expansion and new product launches, partly offset by unfavorable forex.

– Revenues from Russia at ₹19.4 billion, YoY growth of 12%. The growth was largely on account of price increases in certain brands and improved volumes, partially offset by adverse forex.

– Revenues from other CIS countries and Romania at ₹6.5 billion, flat YoY.

– Revenues from RoW territories at ₹14.9 billion, YoY growth of 17%. The growth is largely due to higher base business volumes and new product launches, partially offset by price erosion.

During Q3FY25, we launched 20 new products across countries, with the year-to-date total to 59.

Pharmaceutical Services and Active Ingredients (PSAI)

• Q3FY25 revenues at ₹8.2 billion, YoY growth of 5% and QoQ decline of 2%. YoY Growth in PSAI business was due to increase in volumes, new launches and favourable forex, partially offset by adverse price variance. QoQ decline was primarily due to moderation in the growth of the services business.
• 9MFY25 revenues at ₹24.3 billion, with a growth of 13% YoY. The growth was mainly driven by market share expansion, growth in services business and revenues from new products.

  During the quarter, we filed 23 Drug Master Files (DMFs) globally, taking the year-to-date count to 59.

Income Statement Highlights:

Gross Margin

• Q3FY25 at 58.7% (GG: 61.3%, PSAI: 28.6%), a YoY increase of 20 basis points (bps) and a QoQ decline of 91 bps. The YoY increase was primarily on account of favourable product mix, manufacturing overhead leverage, partly offset by price erosion. On a sequential basis, the decline was primarily on account of unfavorable product mix.
  
  9MFY25 at 59.5% (GG: 63.0%, PSAI: 27.3%), a YoY increase by 91 bps YoY. The expansion in margin was on account of favourable product mix, cost optimisation, partially offset by price erosion.

Selling, General & Administrative (SG&A) Expenses

• Q3FY25 at ₹24.1 billion, YoY increase of 19% and QoQ increase of 5%.
  
  9MFY25 at ₹69.8 billion, YoY increase of 23%.

  The increase is largely on account of costs associated with the NRT business, higher investments in sales & marketing activities to strengthen our existing brands, new business initiatives, including scaling up of consumer health businesses and higher freight costs.

Research & Development (R&D) Expenses

• Q3FY25 at ₹6.7 billion. As % to Revenues – Q3FY25: 8.0% | Q3FY24: 7.7% | Q2FY25: 9.1%.
  
  9MFY25 at ₹20.1 billion. As % to Revenues – 9MFY25: 8.4% | 9MFY24: 7.7%.

  R&D investments are related to our ongoing development efforts across complex generics, peptides, biosimilars, as well as our novel oncology assets.

Net Finance Income

• Q3FY25 at ₹(0.02) billion compared to ₹1.0 billion in Q3FY24.
  
  The decrease was on account of higher foreign currency exchange loss as well as interest expense in comparison to interest income in the corresponding quarter of the previous year.
  
  9MFY25 at ₹2.4 billion as compared to ₹3.0 billion in 9MFY24.

Income Tax

• Q3FY25 at ₹4.7 billion. As % to PBT – Q3FY25: 25.1% | Q3FY24: 24.5% | Q2FY25: 30%.
  
  9MFY25: The ETR was 27.1% as compared to 23.7% in 9MFY24.

  The higher tax for the nine months ended December 31, 2024 is primarily on account of:

– the reversal of a previously recognized deferred tax asset on indexation of land;

– change in the mix of tax jurisdictions; and

– the recognition of a previously unrecognized deferred tax asset on operating tax losses, primarily pertaining to Dr. Reddy’s Laboratories SA, Switzerland, during the nine months ended December 31, 2023.

Profit before tax

• Q3FY25 at ₹18.7 billion, a YoY growth of 3% and a QoQ decline of 2%.
  
  As % to Revenues – Q3FY25: 22.4% | Q3FY24: 25.3% | Q2FY25: 23.9%.
  
  Profit before tax includes ₹1,240 Mn from the recently acquired NRT business.
  
  9MFY25 at ₹56.7 billion, a YoY growth of 2%.

Profit attributable to Equity Holders of Parent Company

• Q3FY25 at ₹14.1 billion, a YoY growth of 2% and a QoQ growth of 13%.
  
  As % to Revenues – Q3FY25: 16.9% | Q3FY24: 19.1% | Q2FY25: 15.7%.
  
  9MFY25 at ₹40.6 billion, a YoY decline of 5%. As % to Revenues – 9MFY25: 16.9% | 9MFY24: 20.5%.

Diluted Earnings per Share (EPS)

• Q3FY25 is ₹16.94. 9MFY25 is ₹48.68.
  
  The Earnings per share has been arrived at on the increased number of shares pursuant to the stock split of one fully paid-up equity share of Rupees five each into five fully paid-up equity share of Rupee one each.

Other Highlights:

Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)

• Q3FY25 at ₹23.0 billion, YoY growth of 9% and flat QoQ.
  
  As % to Revenues – Q3FY25: 27.5% | Q3FY24: 29.3% | Q2FY25: 28.4%.

• 9MFY25 at ₹67.4 billion, a YoY growth of 5%. As % to Revenues – 9MFY25: 28.0% | 9MFY24: 30.9%.

Others:

• Operating Working Capital : As on 31^st December 2024 at₹127.8 billion.
• Capital Expenditure: Q3FY25 at ₹7.1 billion.
• Cash Flow: Q3FY25 at ₹(2.1) billion.
• Net Cash Surplus: As on 31^st December 2024 at ₹16.0 billion
• Net Debt to Equity: As on 31^st December 2024 is (0.05)
• ROCE: Q3FY25 at27.8% (Annualized)

About key metrics and non-GAAP Financial Measures

This press release contains non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K. Such non-GAAP financial measures are measures of our historical performance, financial position or cash flows that are adjusted to exclude or include amounts from the most directly comparable financial measure calculated and presented in accordance with IFRS.

The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS. Our non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. These measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please refer to “Reconciliation of GAAP to Non-GAAP Results” table in this press release.

All amounts in millions, except EPS

Reconciliation of GAAP Measures to Non-GAAP Measures Operating Working Capital
Particulars	As on 31st Dec 2024
	(₹)
Inventories	71,630
Trade Receivables	92,212
Less:
Trade Payables	(36,022)
Operating Working Capital	127,820

Cash Flow
Particulars	Three months ended 31st Dec 2024
	(₹)
Net cash generated from operating activities	13,277
Less:
Taxes	(6,656)
Investments in Property, Plant & Equipment and intangibles	(8,708)
Cash Flow	(2,087)

Net Cash Surplus and Debt to Equity
Particulars	As on 31st Dec 2024
	(₹)
Cash and Cash Equivalents	13,032
Investments	51,166
Short-term Borrowings	(42,400)
Long-term Borrowings, Non-Current	(7,579)
Less:
Restricted Cash Balance – Unclaimed Dividend and others	615
Lease liabilities (included in Long-term Borrowings, Non-Current)	(3,779)
Equity Investments (Included in Investments)	1,356
Net Cash Surplus	16,027
Equity	321,565
Net Debt/Equity	(0.05)

Computation of Return on Capital Employed
Particulars	As on 31st Dec 2024
	(₹)
Profit before Tax	18,742
Less:
Interest and Investment Income (Excluding forex gain/loss)	(475)
Earnings Before Interest and taxes [A]	18,267
Average Capital Employed [B]	258,829
Annualized Return on Capital Employed (A/B) (Ratio)	27.8%

Computation of Capital Employed:
Particulars	As on
	Dec 31, 2024	Mar 31, 2024
Property Plant and Equipment	93,053	76,886
Intangibles	92,925	36,951
Goodwill	11,855	4,253
Investment in Equity Accounted Associates	4,742	4,196
Other Current Assets	28,750	22,560
Other Investments	4,276	1,059
Other Non-Current Assets	1,360	1,632
Inventories	71,630	63,552
Trade Receivables	92,214	80,298
Derivative Financial Instruments	(1,319)	(299)
Less:
Other Liabilities	47,940	46,866
Provisions	5,725	5,444
Trade payables	36,022	30,919
Operating Capital Employed	309,799	207,859
Average Capital Employed	258,829

Computation of EBITDA

Refer page no. 3 & 4.

Earnings Call Details

The management of the Company will host an Earnings call to discuss the Company’s financial performance and answer any questions from the participants.

Date: January 23, 2025

Time: 19:30 pm IST | 09:00 am ET

Conference Joining Information

Option 1: Pre-register with the below link and join without waiting for the operator

https://services.choruscall.in/DiamondPassRegistration/register?confirmationNumber=4085539&linkSecurityString=1bdc5f535b

Option 2: Join through below Dial-In Numbers
Universal Access Number:	+91 22 6280 1219 +91 22 7115 8120
International Toll-Free Number:	USA: 1 866 746 2133 UK: 0 808 101 1573 Singapore: 800 101 2045 Hong Kong: 800 964 448

No password/pin number is necessary to dial in to any of the above numbers. The operator will provide instructions on asking questions before and during the call.

Play Back: The play back will be available after the earnings call, till January 30^th, 2025. For play back dial in phone No: +91 22 7194 5757, and Playback Code is 40359#.

Transcript: Transcript of the Earnings call will be available on the Company’s website: www.drreddys.com

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About Dr. Reddy’s: Dr. Reddy’s Laboratories Ltd. (BSE: 500124, NSE: DRREDDY, NYSE: RDY, NSEIFSC: DRREDDY) is a global pharmaceutical company headquartered in Hyderabad, India. Established in 1984, we are committed to providing access to affordable and innovative medicines. Driven by our purpose of ‘Good Health Can’t Wait’, we offer a portfolio of products and services including APIs, generics, branded generics, biosimilars and OTC. Our major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Our major markets include – USA, India, Russia & CIS countries, China, Brazil, and Europe. As a company with a history of deep science that has led to several industry firsts, we continue to plan and invest in businesses of the future. As an early adopter of sustainability and ESG actions, we released our first Sustainability Report in 2004. Our current ESG goals aim to set the bar high in environmental stewardship; access and affordability for patients; diversity; and governance.

For more information, log on to: www.drreddys.com.

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Disclaimer: This press release may include statements of future expectations and other forward-looking statements that are based on the management’s current views and assumptions and involve known or unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words “may”, “will”, “should”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, or “continue” and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to without limitation, (i) general economic conditions such as performance of financial markets, credit defaults , currency exchange rates , interest rates, persistency levels and frequency / severity of insured loss events (ii) mortality and morbidity levels and trends, (iii) changing levels of competition and general competitive factors, (iv) changes in laws and regulations and in the policies of central banks and/or governments, (v) the impact of acquisitions or reorganization , including related integration issues, and (vi) the susceptibility of our industry and the markets addressed by our, and our customers’, products and services to economic downturns as a result of natural disasters, epidemics, pandemics or other widespread illness, including coronavirus (or COVID-19), and (vii) other risks and uncertainties identified in our public filings with the Securities and Exchange Commission, including those listed under the “Risk Factors” and “Forward-Looking Statements” sections of our Annual Report on Form 20-F for the year ended March 31, 2024 and quarterly financial statements filed in Form 6-K with the US SEC for the quarter ended June 30, 2024, September 30, 2024 and our other filings with US SEC. The company assumes no obligation to update any information contained herein.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250123328098/en/

INVESTOR RELATIONS

RICHA PERIWAL [email protected]

AISHWARYA SITHARAM [email protected]

MEDIA RELATIONS

USHA IYER [email protected]

KEYWORDS: California United States India North America Asia Pacific

INDUSTRY KEYWORDS: Health Pharmaceutical

MEDIA:

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