Dr. Reddy's Q2 FY27 earnings call: what management said

Dr. Reddy's reported consolidated revenue of ₹8,670.8 crore for the quarter ended 30 September 2026, down 1.5% year on year, and net profit of ₹925 crore, down 36%, according to Business Standard's report of its results of 23 October. On the call that day, management attributed the decline mainly to lower lenalidomide sales in North America and said the base business, excluding that product, grew at double-digit rates. Gross margin was 52.1%, within the 50% to 55% range management guides, and EBITDA margin was 20.6%. Management said freight, raw material and solvent costs linked to West Asia supply disruptions cost about 100 basis points of EBITDA, and expects that pressure to continue into the third and fourth quarters.

Management expects to resume semaglutide supply by early November, pending validation, and the product is approved in 10 countries so far. The FDA goal date for its abatacept biosimilar is 22 December 2026, and management acknowledged a chance of a complete response letter. Capital expenditure guidance was trimmed to ₹1,600 crore to ₹1,700 crore. Spectate Media has not seen Dr. Reddy's own filed transcript. This summary is based on a third-party copy that its publisher says may contain transcription errors, so it carries no direct quotes and leaves out segment growth rates that conflict with Business Standard's report.

Positives

• Base business grew despite the lenalidomide drop. Management said the business excluding North American lenalidomide grew at double-digit rates.
• Margins stayed above 20%. EBITDA margin was 20.6%, and management said it expects to hold margins above 20%, with a longer-term goal of about 25%.
• Semaglutide supply should resume. Management expects supply in early November, pending validation, after approvals in 10 countries.
• Contract manufacturing is scaling. Management said its CDMO revenue is over $100 million on a trailing basis and targets two to three times growth over three to four years.

Watch-points

• Input and freight costs are not easing yet. Management said the roughly 100 basis point margin drag will continue into the next two quarters.
• A biosimilar approval is not certain. The abatacept FDA goal date is 22 December 2026, and management acknowledged a possible complete response letter.
• Lenalidomide sales are falling. North America is the main reason profit fell 36%, per the results report.
• Tax rate rose. Management put the effective tax rate at 25.6%, up from 22.2%, because of the mix of jurisdictions.

Source: Dr. Reddy's Q2 FY27 earnings call transcript (Motley Fool copy).

This is a summary of a company earnings call, published as general information. It is not investment advice or a recommendation to buy or sell any security. Read the full transcript before relying on any point.