Dr Reddy’s (Q1 FY13)

India Infoline News Service | Mumbai |

India recorded revenue growth 18.6% yoy surpassing market growth by ~300bps.

CMP Rs1,655, Target Rs1,888, Upside 13.4%
  • Q1 FY13 Revenues at Rs25.4bn reporting a growth of 28.4% yoy

  • Generic business led the growth (+32% yoy) while PSAI segment (+14% yoy) reported lackluster performance

  • Strong and encouraging domestic market growth of 18.6% yoy; led by volume increase across the key brands.

  • Reported PAT grew by 28% yoy at Rs3.4bn; adjusted PAT at Rs3.7bn (adjusted for forex)

  • We raise our 9-month target price to Rs1,888 as we rollover our multiple to the next period and rate Dr Reddy’s “BUY” from Market Performer

Result table

(Rs mn) Q1FY13 Q1FY12 % yoy Q4FY12 % qoq
Net sales 25,406.1 19,783.0 28.4 26,584.5 (4.4)
Inc/(dec) in stock (1,234.2) (520.3) 137.2 137.3 (998.9)
Con of Materials (9,027.8) (6,349.9) 42.2 (8,440.4) 7.0
Other Expenditure (4,072) (3,397.9) 19.8 (4,036.2) 0.9
Gross Profit 13,540.9 10,555.5 28.3 13,970.6 (3.1)
SG&A Expenses (6,982) (5,524) 26.4 (5,813) 20.1
R&D Expenses (1,564) (1,197) 30.6 (1,740) (10.2)
Other (Income)/Exp (219) (187) 16.8 (198) 10.4
Operating profit 5,213 4,022 29.6 6,616 (21.2)
OPM (%) 20.5 20.3 19 bps 24.9 (436) bps
Dep & Amort (1,296.0) (1,233.0) 5.1 (2,444.0) (47.0)
Net Interest income (212) (47) 355.1 82 (357.4)
Other income 19 4 375.0 12 65.2
PBT 3,725 2,747 35.6 4,265 (12.7)
Tax (365) (567) (35.7) (838) (56.4)
Eff tax rate (%) 9.8 20.7 (1086 ) bps 19.6 (985) bps
PAT 3,359.8 2,626.6 27.9 3,427.4 (2.0)
PAT margin (%) 13.2 13.3 (5) bps 12.9 33 bps
Adjustments 297 158 88.0 836 -
Adj PAT 3,657 2,785 31.3 4,263 (14.2)
Adj Ann. EPS (Rs) 86.1 65.7 31.1 100.6 (14.3)
Source: Company, India Infoline Research

Generic business led the growth (+32% yoy) while PSAI segment (+14% yoy) reported lackluster performance
Generic business led the overall growth. North America grew by 38% yoy and 27% on a constant currency ($). The sequential growth in the US business was restricted due to delay in key product approvals. The launch of Atorvastatin got delayed to Q2FY13 (recently launched). Russia & CIS was up 38% yoy, and Europe grew by 13.6% yoy. India recorded revenue growth 18.6% yoy surpassing market growth by ~300bps. While PSAI segment disappointed; revenues reported yoy growth of 14.4% at Rs5.5bn. We expect sequential improvement in the PSAI segment as the current quarters’ weaker performance was attributable to lower uptake by the customers.  

Strong and encouraging domestic market growth of 18.6% yoy; led by volume increase across the key brands
India recorded revenue growth 18.6% yoy surpassing market growth by ~300bps. This is the fifth consecutive quarter in which DRDY has reported progressive yoy growth. Growth is driven by new product launches and volume increase in products including Stamlo, Reditux, OmezD and Razo. DRDY launched 10 new products in market. Biosimilars portfolio contributed the most in the revenue growth aided by recent biologic launches; Cresp and Peg-Grafeel grew by 36%.

Sales Breakup

(Rs mn) Q1FY13 Q1FY12 % yoy Q4FY12 % qoq
Global Generics 19,066 14,424 32.2 18,396 3.6
Nort America 7920 5756 37.6 8731 (9.3)
Europe 2,178 1917 13.6 1799 21.1
India 3482 2936 18.6 3203 8.7
Russia & Other CIS 4167 3018 38.1 3545 17.5
RoW 1319 797 65.5 1117 18.1
PSAI 5,527 4,832 14.4 7,484 (26.1)
North America 1064 842 26.4 1192 (10.7)
 

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