Dr Reddy's Q1 Preview: PAT may fall 4% YoY on pricing pressure, subdued US sales

Pharma major Dr Reddy's is expected to have a benign first quarter, dragged down by weak US sales due to increased competition and pricing challenges.

Net profit for the reporting quarter may decline 4% year-on-year, according to an average estimate of four brokerages, while revenues are seen rising 8% year-on-year.

The subdued growth in US sales during the June 2024 quarter may be offset by higher Revlimid sales, analysts said.


In the preceding March quarter, Dr Reddy's reported a consolidated net profit growth of 36% year-on-year to Rs 1,307 crore, while revenue from operations rose 12% year-on-year to Rs 7,083 crore.

Here's what analysts expect from Dr Reddy's Q1

YES Securities

We expect domestic growth to lag IPM while US to get a boost from 2-3 CGT designated approvals along with launch of gOracea and Lumify that can lead to traction in ex-Revlimid US sales. Margin to inch up quarter-on-quarter though seen lower year-on-year.

Motilal Oswal

Expect US sales to grow 5.2% year-on-year to $410 million, led by niche launches, volume offtake in differentiated portfolios, and reduced intensity of price erosion. Expect Russia/other CIS countries’ sales to grow 1.6% year-on-year to Rs 7.7b, led by new launches offset by unfavourable currency.

India revenue to grow by 10.5% year-on-year. Strong traction in Pain/Derma, new launches and in-licensing opportunities.

Kotak Equities

We expect North America base business (ex-Revlimid) sales to grow 1% quarter-on-quarter to $295 million, led by largely stable market share across most molecules. In our estimates, we factor in $110 million of gRevlimid sales in the US in 1QFY25 for DRRD, higher than $100 million in 4QFY24.

Within the base business, we bake in $30 million sales from the Mayne portfolio, in 1QFY25. We expect DRRD's domestic sales to grow by 16% year-on-year in 1QFY25, led by 9% growth in its organic business, as well as, contributions from the in-licensing deals with Sanofi and Bayer. On a high base, we expect 9% year-on-year and 3% growth in Europe and Russia, respectively.

For ROW and PSAI segments, we factor in 15% and 19% year-on-year sales growth, respectively. Overall, we expect DRRD's sales to grow 8% year-on-year (+3% quarter-on-quarter) in 1QFY25.

Axis Securities

Expect $300 million base business and $105 million gRevlimid sales in the US. Expect flattish growth in US sales quarter-on-quarter. We have factored in stable gRevlimid sales quarter-on-quarter. Commentary on US base business and margin trend are key monitorables.

Incred Equities

We expect a 2% decline in US sales to $386 million (with market share loss in gCiprodex, gVascepa, gSuboxone and gToprol). This should be partially negated by higher gRevlimid sales.

We expect a 7% year-on-year growth in India. We also expect relatively weak growth in Russia (-5% year-on-year; 1Q is seasonally weak) while the RoW market should continue its recent momentum with a 25% year-on-year growth.

We expect the margins to improve by 230 bps quarter-on-quarter due to weak base, although year-on-year the margins should come off by 260 bps.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)