Dr Reddy's - Q1FY14 Results - IIFL

- Revenue growth of 12% yoy to Rs28.5bn was below our expectation led by lower than expected growth in PSAI segment

- Global Generic business advanced by 14.9% yoy and declined by 3.2% qoq to Rs21.9bn

- Domestic revenues remained flat on yoy and qoq to Rs3.5bn

- The US business advanced by 37.3% yoy to Rs10.8bn whereas Europe degrew by 27.8% yoy and 14% qoq to Rs1.6bn

- PSAI segment reported poor performance after continuum robust performance in last three quarters. The segment de-grew by 42.3% qoq while remained muted yoy (+6.2% to Rs5.9bn)

- Operating margin at 20.3% was lower than our estimate of 21% on the back of higher R&D expenses; even product mix impacted the margin

- Adjusted PAT was up by 11.6% yoy to Rs3.7bn; Reported PAT at Rs3.6bn was above below our estimate of Rs4.2bn

- We maintain our BUY rating with a revises target price of Rs2,600.

Source : Equity Bulls

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