Dr. Reddy's Lab Q2 profit more than doubles to Rs 1,092 crore on tax benefit

Homegrown drug maker Dr. Reddy's Laboratories on Friday reported more than two-fold jump in consolidated net profit at Rs 1,092.50 crore for the second quarter ended September 30, 2019, helped by tax credit and rise in operating income.

"The Hyderabad-based company had posted consolidated net profit of Rs 503.80 crore in the same quarter last year," Dr. Reddy's Laboratories said in a filing to the Bombay Stock Exchange.

Consolidated revenue during July-September quarter of this fiscal rose by 26.41 per cent to Rs 4,800.9 crore as against Rs 3,797.8 crore in the year-ago period.

During the quarter under review, the company posted a tax benefit of Rs 330 crore due to recognition of deferred tax assets of Rs 520 crore, primarily related to the MAT credit, the pharma major said.

The operating profit or EBITDA (Earnings before Interest, Tax, Depreciation and Amortization) increased to Rs 1,433.80 crore as against Rs 864.60 crore in the year-ago period and Rs 1,134.30 crore in June quarter, Dr. Reddy's Lab said.

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The gross margin stood at 57.5 per cent in September quarter of FY20, as against 51.7 per cent in the previous quarter and 55.0 per cent in the quarter ended September 30, 2018.

Commenting on Q2 results, Co-Chairman and Managing Director, GV Prasad said "I am pleased with our performance across the businesses and strong cash generation during the quarter. We are progressing well in execution of our strategy and in our transformation journey on quality and efficiency."

India business grew 9 per cent Y-o-Y and 8 per cent sequentially to Rs 750 crore in September quarter of 2019. The year-on-year growth was driven by new products, improved realisations and volume traction in base business, company said.

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While revenues from North America remained flat at Rs 1,430 crore, Europe's revenue stood at Rs 280 crore. Revenue from emerging markets was at Rs 830 crore, it added.

In a separate filing, the drug maker said that its board has granted 3,116 Indian stock options, exercisable at par value of Rs 5 under ESOP, 2002, and 4,140 American Depository Receipts (ADR) stock options, exercisable at par value of Rs 5 under ADR Stock Option Scheme, 2007.

Following Q2 earnings, shares of Dr. Reddy's Laboratories were trading at Rs 2,761.35 apiece, down 0.77 per cent, against previous close on the Bombay Stock Exchange.

Edited by Chitranjan Kumar