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Dr Reddy's revenue seen flat but other metrics might be hit | Earnings Preview

Dr Reddy's revenue seen flat but other metrics might be hit | Earnings Preview

Dr Reddy's revenue seen flat but other metrics might be hit | Earnings Preview
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By Ekta Batra   | Hormaz Fatakia  Oct 27, 2022 12:05 PM IST (Updated)

Shares of Dr Reddy's Laboratories have declined 7.5 percent this year.

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Hyderabad-based drugmaker Dr Reddy's Laboratories will report its September quarter results on Friday, October 28.
It is likely to be a muted quarter for the pharma major owing to a high base. Dr Reddy's September quarter results in 2021 received a boost due to licensing income and a COVID base.
A CNBC-TV18 poll expects the company's revenue to remain flat while net profit may decline 21 percent from the same period last year. The margin will also likely fall to 22.1 percent from 27 percent last year.
When compared to the June quarter, the company's revenue is likely to rise 10 percent. However, net profit and margin will decline on a sequential basis as well.
The company's US sales are seen to be between $240 million and $248 million, aided by the launch of the Revlimid generic with exclusivity in two strengths and a rise in prescription volumes of generic versions of the cardiac drug Vasostrict and the Ciprodex antibiotic.
Jefferies expects the Revlimid generic sales to lift the US business from the September quarter. As the launch took place towards the end of the quarter, its contribution to overall sales is likely to range between $5 million to $30 million.
A third of Dr Reddy's sales come from North America. For the June quarter, the company's US sales had declined 11 percent.
CLSA also remains constructive on Dr Reddy's due to the sustained launch momentum in the US, including the Revlimid.
Nearly 20 percent of the company's revenue comes from India. The country's business may grow 7-8 percent in the September quarter, led by growth in therapies like dermatology and pain. The India business received a boost during the June quarter due to the sale of non-core brands worth Rs 230 crore.
The company also received $72 million from the settlement agreement with Indivior on the opioid drug Suboxone generic.
During the June quarter results, Dr Reddy's maintained its near to medium-term guidance of single-digit growth in the US business, double-digit growth for the non-US business and EBITDA margin of 25 percent with quarterly volatility.
The political uncertainty in Russia is likely to impact Dr Reddy's Russia + CIS portfolio. The business may decline 12 percent year-on-year in Rouble terms. However, in rupee terms, the country may report a 7-8 percent growth. There is also likely to be traction on a sequential basis due to inventory normalisation in the said geography.
Commentary will also be awaited from the management on the acquisition of Eton Pharma. The company announced the acquisition of Eton Pharma in June this year for an upfront payment of around $5 million, along with a contingent payment of $45 million.
Brokerage firm Morgan Stanley also expects consistent performance from the company starting the September quarter, while Nomura has pegged the Revlimid generic upside at Rs 346 per share.
Shares of Dr Reddy's are down 7.5 percent this year and 10 percent away from their 52-week high.
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