Dr Reddy's Q4 miss weighs on margins; brokerages mixed on growth
Dr Reddy's Q4 miss weighs on margins; brokerages mixed on growth
Hyderabad-based Dr Reddy's reports a softer Q4, pressured by NA sales and g-Revlimid adjustments; analysts mixed on near-term recovery but see long-term potential in semaglutide and biosimilars.
Hyderabad-based Dr Reddy's Laboratories reported a weaker-than-expected March quarter, with North America sales contracting and g-Revlimid-related adjustments denting EBITDA and net profit. The results underscored earnings and margin pressures, even as the company kept its longer-term growth story intact, anchored by semaglutide and a growing biosimilars portfolio. Investors watching for a revival in the US market will be weighing how much catch-up play is left and whether pricing dynamics ease in upcoming quarters.
Analysts cautioned that the quarter did not meet consensus on several fronts, highlighting a notable decline in key profitability metrics after adjustments. The weakness in North America reversed a period of earlier growth, and the company’s FY26 revenue trajectory has seen a material YoY drop in NA sales. With a shelf-stock adjustment tied to g-Revlimid, both EBITDA and PAT came in well below expectations, prompting revisions of near-term targets and a tempered view on the quarter’s contribution to full-year goals.
Dr Reddy's also pointed to strength from launches, reporting 25 new products in FY26, which helped offset some of the headwinds. In spite of the pullback in NA, the pipeline for biosimilars and the potential of semaglutide in India and other markets keep the growth story alive for the next few years.
Looking ahead, investors will be keen to see how management improves margins while sustaining a rich development slate. If biosimilars price discipline and U.S. competition stabilize and the semaglutide opportunity scales, Dr Reddy's could stage a steady recovery even as the current quarter remains a cautionary note.
