Dr. Reddy's Posts Robust Q2 Performance Amid Global Headwinds
Dr. Reddy's, the Indian multinational pharmaceutical company, has reported a robust second quarter performance despite facing significant global headwinds.
The company's revenue for the quarter ended September 30, 2026, stood at INR 8,671 crore ($905 million), a decline of 1.5% on year-over-year and a growth of 7.4% on sequential basis. This performance was driven by strong underlying base business across key businesses, except Europe and API, fueled by new product launches and favorable Forex movements.
The company's Chief Financial Officer, Mr. M.V. Narasimham, noted that the year-over-year decline in revenue was largely due to lower lenalidomide sales, which had a significant impact on the company's margins. However, he also pointed out that the underlying base business maintained its growth momentum, delivering double-digit growth.
The company's gross profit margin for the quarter stood at 52.1%, an increase of 562 basis points sequentially and a decrease of 254 basis points year-over-year. The reported gross margin for Q2 FY 2027 was 56.2% for Global Generics and 11.8% for PSAI.
The company's operating expenses, including SG&A spend, stood at INR 2,808 crore, an increase of 6% year-over-year and a decline of 3% sequentially, accounting for 32% of revenue. The R&D spend was at INR 524 crore, down by 16% year-over-year and 9% sequentially, accounting for 6% of revenues.
Despite the challenges faced by the company, the EBITDA margin stood at 20.6%, a decrease of 614 basis points year-over-year and an increase of 806 basis points sequentially. The profit before tax was at INR 1,228 crore ($128 million), representing a margin of 14.2%.
The effective tax rate for the quarter was at 25.6% compared to 22.2% in the corresponding period last year. However, the company's net cash surplus as of September 30, 2026, stood at INR 2,502 crore ($261 million), a significant improvement from the previous quarter.
Dr. Reddy's CEO, Mr. Erez Israeli, noted that the company's strategic outlook remains positive despite the current challenges. He emphasized the importance of innovation and R&D in driving growth and improving profitability.
The company's performance during the second quarter was robust considering the global headwinds it faced. The underlying base business maintained its growth momentum, and the company's margins, although impacted by lower lenalidomide sales, remain relatively stable. As the company continues to innovate and invest in R&D, its strategic outlook remains positive, and investors can expect continued growth and improved profitability.
