InvestorQ : How has Reddy Labs performed in the Jun-20 quarter?
Aditi Sharma made post

How has Reddy Labs performed in the Jun-20 quarter?

Answer
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Aashna Tripathi answered.
3 months ago


Reddy Laboratories reported a 12.6% drop in net profits at Rs.579 crore for the Jun-20 quarter. However, the drop may not be reflective as the corresponding profit in Jun-19 quarter was boosted by the settlement claim of Rs.346 crore that Reddy Labs received from Celgene with respect to the cancer drug. This was more of an extraordinary item.

For the Jun-20 quarter, the revenues from operations were up 15% at Rs.4418 crore. Gross margins improved by 430 bps at 56%. Margins were also higher on a sequential basis. Operating profits were up 2% at Rs.1162 crore but OPMs fell 320 bps to 26.3%. The PSAI segment of Reddy Labs saw 88% growth due to increase in new product sales.

Let us also look at the geographical spread of revenues. The Indian pharma market saw a fall of 10% while the European market showed a positive growth of 48%. Even North America and other Emerging Markets grew by 6% and 9% respectively. It had also acquired key business segments of Wockhardt during the quarter and the integration had already begun.

For Reddy Labs, the sales volumes were severely impacted in certain markets due to lower prescriptions generated as well as weak patient footfalls in pharmacies/ clinics. The depreciation of rupee against the US dollar and euro supported the business. The stock has been one of the outperformers in 2020 and has been driven by healthcare and pharma.