Dr Reddys Labs 3QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on Dr Reddys 3QFY2016 Results:

"Dr Reddys Labs, posted results below expectations both on top and bottom-line. For 3QFY2016, the company posted sales of INR 3968cr V/s INR 4420cr expected and INR 3843cr in 3QFY2015, a YoY growth of 3.0%. The lower than expected sales performance is on back of the Emerging market (INR 639.9cr) which dipped by 28.0% YoY. Russia with sales of INR 310cr declined by 21% YoY, on back of deprecation of Rubble. In constant currency the region posted a YoY growth of 5%. Revenue from other CIS countries and Romania (~INR 90cr) posted a YoY dip of 17%. ROW (INR 240cr) posted a dip of 38% YoY on back of the calibrated sales of Venezuela.

The key regions; USA (INR 1941.7cr) posted a robust growth of 18% YoY, Europe (INR 194cr) posted a YoY growth of 14% and India did sales of INR 581cr, a YoY growth of 34%( aided by the UCB acquired brands). Overall generic segment posted a sales growth of 7% YoY, while PSAI segment posted a sales de-growth of 17%.

On operating front, the OPM's have come in at 25.5% V/s 27.1% expected and V/s 23.0% during the last corresponding period, on back of improved sales mix. R&D expenditure, during the quarter came in at 10.3% of sales V/s 11.2% of sales expected. The dip is mainly on back of due to the receipt of company's share of the development costs and other contractual amounts from Merck Serono for biosimilars development programme.

Also, the other income during the quarter came in at INR 12.2cr (on account of INR 63.7cr forex losses) V/s INR 34.1cr during the last corresponding period along with the 30% dip in tax outgo lead the company to post a net profit of INR 579cr V/s INR 746cr expected V/s INR 574cr in 3QFY2015, a YoY growth of 1.0%. We maintain our BUY rating with a price target of INR 3933."

Shares of DR.REDDY'S LABORATORIES LTD. was last trading in BSE at Rs.2959.65 as compared to the previous close of Rs. 3070.65. The total number of shares traded during the day was 178944 in over 15476 trades.

The stock hit an intraday high of Rs. 3112 and intraday low of 2950. The net turnover during the day was Rs. 542422426.

Source : Equity Bulls

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