Dr Reddy's Q3 preview: PAT may fall 22% YoY as US pressure to weigh on earnings

Dr Reddy's Laboratories is expected to report a muted performance in the December quarter, with pressure from the US business offsetting steady growth in India and Europe. On average, five brokerages expect consolidated revenue to decline about 1% year on year in Q3, while profit after tax is seen falling 22% from a year ago, reflecting a lower contribution from gRevlimid and margin compression.

North America: Revlimid drag dominates

The US business is expected to remain the key drag on overall performance. Axis Securities expects US sales of around $310 million, with gRevlimid limits resulting in a negligible contribution during the quarter. Kotak Equities models slightly higher North America sales of $325 million, but still estimates a sharp 13% quarter-on-quarter decline due to pricing pressure and erosion in the base business.


Motilal Oswal is more cautious, projecting a 21.6% year-on-year decline in North America sales to about $310 million, led by intensified pricing pressure on gRevlimid. YES Securities also notes that Revlimid will no longer be a meaningful contributor after more than two years of sales, exposing the underlying growth trajectory of the US base portfolio.

Brokerages broadly agree that the absence of Revlimid will continue to weigh on growth, keeping the US business subdued in the near term.

India: A relative bright spot

India is expected to remain the strongest contributor to growth in Q3. Axis Securities expects around 10% growth, driven by strong traction in cardiac, pain management, and vaccination segments. Kotak Equities forecasts even stronger momentum, modelling 13% year-on-year growth in domestic sales.

Motilal Oswal expects the India business to grow 11% year on year, supported by robust demand in vaccines, cardiac therapies, and pain management. Analysts view India as a structurally strong market for Dr Reddy's, with differentiated launches and chronic therapies continuing to gain traction.

Europe and other markets: Steady expansion

Europe is expected to post healthy growth in the quarter. Axis Securities estimates around 7% growth, supported by steady demand and portfolio traction, while Kotak Equities expects 13% year-on-year growth in Europe, led by strong performance in the nicotine replacement therapy portfolio.

Kotak also expects Russia to deliver 15% year-on-year growth, driven by volume expansion, though partially offset by marginal rouble depreciation. For the rest of the world, brokerages bake in around 13% year-on-year growth, supported by stable emerging market demand.

Key monitorables

Beyond quarterly numbers, analysts will closely watch progress on semaglutide approval in the Canadian market, which Axis Securities and Motilal Oswal flag as an important driver of medium-term growth visibility. Updates on the filing of Abatacept with the USFDA and potential US contract manufacturing partnerships will also be in focus, particularly in the context of mitigating tariff-related risks.

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