Dr Reddy’s (Q4 FY12)

India Infoline News Service | Mumbai |

All around strong performance; Generic business along with PSAI segment flourished well

  • Germany business continues to give pain; one more write off of Rs1bn
  • Q4 FY12 Revenues at Rs26.6bn reporting a growth of 32% yoy
  • All around strong performance; Generic business along with  PSAI segment flourished well
  • Strong domestic market yoy growth of 16.7%; though on a lower base
  • Reported PAT almost flat yoy; adjusted PAT at Rs4.2bn, yoy growth of 23%
  • We maintain our target price at Rs1,825 and rate Dr Reddy’s market performer

Result table

(Rs mn)
Q4FY12
Q4FY11
% yoy
Q3FY12
% qoq
Net sales
26,584.5
20,173.0
31.8
27,691.9
(4.0)
Inc/(dec) in stock
137.3
(694.8)
(119.8)
(361.2)
(138.0)
Con of Materials
(8,440.4)
(6,701.3)
26.0
(7,863.2)
7.3
Other Expenditure
(4,036)
(3,217.8)
25.4
(3,615.1)
11.6
Gross Profit
13,970.6
10,948.7
27.6
16,574.8
(15.7)
SG&A Expenses
(5,813)
(5,066)
14.7
(6,371)
(8.8)
R&D Expenses
(1,740)
(1,491)
16.7
(1,514)
15.0
Other (Income)/Exp
(198)
(512)
(61.3)
(165)
20.1
Operating profit
6,616
4,903
34.9
8,854
(25.3)
OPM (%)
24.9
24.3
58 bps
32.0
(709) bps
Depr & Amort
(2,444.0)
(1,061.0)
130.3
(1,307.0)
87.0
Net Interest income
82
(74)
(210.6)
174
(52.7)
Other income
12
(38)
(130.3)
25
(54.0)
PBT
4,265
3,730
14.4
7,746
(44.9)
Tax
(838)
(567)
47.7
(2,617)
(68.0)
Effective tax rate (%)
19.6
15.2
443 bps
33.8
(1414) bps
PAT
3,427.4
3,345.0
2.5
5,129.1
(33.2)
PAT margin (%)
12.9
16.6
(369) bps
18.5
(563) bps
Adjustments
836
127
557.1
26
-
Adj PAT
4,263
3,472
22.8
5,156
(17.3)
Adj Ann. EPS (Rs)
100.6
82.1
22.5
121.7
(17.3)

Source: Company, India Infoline Research

 

Germany business continues to give pain; one more write off of Rs1bn

Dr. Reddy’s (DRDY) took one more round of hit on the back of German business write off. In Q4 FY12, there were triggering events in the German market relating to reduction in the reference prices and additional tenders at low bid prices. As a result, non-cash impairment charge of Rs1,040mn was recorded in the books. Impairment charge after adjusting for tax benefit was Rs730mn.

 

Q4 FY12 Revenues at Rs26.6bn reporting a growth of 32% yoy

North America grew by 48% yoy , Russia & CIS was up 32% yoy, and Europe de-grew10% yoy. Domestic business finally managed to report growth which is in line with industry growth, though on a lower base. The company launched Launch of olanzapine 20mg and ziprasidone in the US. The sales were below expected in US led by olanzapine shelf stock adjustment (was below $2 million due to lower generic substitution).

 

India; business grew finally in line with industry growth

India recorded growth of 16% growth in revenues better than last four quarters. In last four quarters the growth trend has been progressive. There is substantial improvement in the growth nos. Growth is driven by new product launches and volume increase in products Stamlo, Reditux, Omez D and Razo. Biosimilars portfolio contributed the most in the Domestic revenue growth (CAGR 32%).

 

Sales Breakup

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(Rs mn) 
Q4FY12
Q4FY11
% yoy
Q3FY12
% qoq
Global Generics
18,396
14,167
  29.9
21,287
  (13.6)
Nort America
8731
5918
  47.5
11114
  (21.4)
Europe
1,799
2005
  (10.3)
2426
  (25.8)
India
3203
2745
  16.7
3333
  (3.9)
Russia & Other CIS
3545
2680
  32.3
3317
  6.9
RoW
1117
818
  36.6
1097
  1.8
PSAI
7,484
5,552
  34.8
5,563
  34.5
North America
1192
749
  59.1
1170
  1.9