Subtle Margin Expansion Anticipated Amid Mixed Regional Growth
Dr Reddy’s Laboratories is set to announce its Q4 FY25 earnings on May 9, with analysts forecasting stable topline performance supported by consumer wellness and regional growth in India and Europe. The Moneycontrol poll of five brokerages predicts revenue of ₹7,058 crore, reflecting a 15.5% year-on-year increase. Net profit is estimated at ₹1,035 crore, up 14.95% YoY. EBITDA margins, however, are projected to shrink slightly to 26.35% from 29.7% in Q4FY24, primarily due to the absence of one-off milestone income that bolstered previous quarters.
Highlights:
Revenue expected at ₹7,058 crore, up 15.5% YoY.
Net profit forecasted at ₹1,035 crore, marking 14.95% YoY growth.
EBITDA margin projected at 26.35%, down from 29.7% YoY.
Absence of milestone income seen weighing on sequential margins.
India and Europe Units Drive Growth Through Strategic Acquisitions
The company’s India and Europe operations are likely to underpin Q4 revenue growth. The integration of the Sanofi-acquired vaccine portfolio has strengthened Dr Reddy’s domestic chronic therapy offerings, helping to build a broader consumer wellness base. This full-quarter consolidation of the vaccine segment is expected to be a key revenue lever. In Europe, the scaling of the recently acquired Nicotine Replacement Therapy (NRT) portfolio continues to deliver both top-line growth and gross margin enhancement via an improved product mix.
Highlights:
Sanofi vaccine portfolio aids revenue growth in India.
Expansion in chronic and preventive healthcare segments strengthens domestic market base.
NRT portfolio in Europe supports margins via product mix shift.
US Business Sees Limited Momentum Amid Generic Price Erosion
Dr Reddy’s performance in the US remains a concern, with gRevlimid providing only partial offset to a broadly pressured generics portfolio. Analysts, including those from Axis Securities, estimate stable sequential revenue in the US at around $415 million, with gRevlimid accounting for ~$130 million and the base generics segment contributing ~$285 million. While the decline in one-off milestone income from Q3 may weigh on sequential growth, a weak generics landscape driven by pricing pressure and competitive intensity is the major drag.
Highlights:
US revenue pegged at ~$415 million, with gRevlimid stable at $130 million.
Base generics remain under pressure from price erosion and competition.
No milestone income in Q4 likely to impact sequential growth.
Analysts flag sustained weakness in high-value generics segment.
Margin Trends Influenced by Currency Tailwinds and Product Mix
Despite muted sequential growth, Dr Reddy’s margins are expected to benefit from a favourable product mix, improved operational leverage in India and Europe, and rupee depreciation tailwinds on US exports. While analysts like those from Equirus see gRevlimid stabilizing, they caution that longer-term contribution from the product may diminish as market competition intensifies. The absence of milestone-based revenue from earlier quarters is another factor affecting EBITDA trajectory.
Highlights:
Product mix and USD tailwinds help preserve margin structure.
Rupee depreciation aids exports-led profitability.
Gross and EBITDA margins expected to remain steady.
Long-term stability of gRevlimid volumes remains uncertain.
Monitorables: US Launches, Generic Pipeline, and Consumer Health Updates
Investor focus will remain on the outlook for Dr Reddy’s US generics business, including the timeline for gIxempra — a key oncology drug — and updates on other complex or specialty filings. Management commentary around competitive pricing pressure in core US molecules and recovery in the base generics portfolio will be crucial. On the domestic front, updates on the post-integration performance of the Sanofi vaccine line and scaling of the nutraceuticals and NRT segments will be closely tracked to evaluate the company’s consumer-centric growth strategy.
Highlights:
Watch for guidance on gIxempra launch and US generics pipeline.
Monitoring stability and recovery in US base generics.
Key updates expected on integration of Sanofi vaccines.
Progress in nutraceuticals and consumer health strategy under spotlight.
