Dr Reddy’s Q2 Results | Net profit up 7%, revenue climbs 10% to ₹8,828 crore; beats estimates

Hyderabad-based drug major Dr Reddy’s Laboratories Ltd on Friday (October 24) reported a net profit of ₹1,347 crore for the September quarter (Q2 FY26), up 7.3% year-on-year from ₹1,256 crore, though slightly below the CNBC-TV18 poll estimate of ₹1,403.7 crore.

The company’s revenue increased 9.8% YoY to ₹8,828 crore, compared with ₹8,038 crore in the same period last year, surpassing the poll estimate of ₹8,595.4 crore.

Operating performance showed a mixed trend, with EBITDA at ₹2,010 crore, down 3.2% YoY from ₹2,076.8 crore and below the poll estimate of ₹2,208.5 crore. EBITDA margin stood at 22.8%, compared with 25.8% YoY and 25.7% expected by analysts.

For H1 FY26, consolidated revenues were ₹17,350 crore, reflecting an 11% YoY growth. Growth was broad-based across key markets, except North America Generics, which faced higher price erosion in select products and lower lenalidomide sales. The acquired Consumer Healthcare portfolio in Nicotine Replacement Therapy (NRT) contributed positively to overall performance.

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Global Generics (GGJ) posted Q2 FY26 revenues of ₹8,500 crore, up 10% YoY and 4% QoQ, with H1 FY26 revenues at ₹15,410 crore, up 10% YoY. North America revenues declined to ₹3,240 crore in Q2 FY26, down 13% YoY and 5% QoQ, with H1 FY26 revenues at ₹6,650 crore, down 12% YoY. The decline was mainly due to price erosion in key products, including Lenalidomide, partially offset by favourable forex and new product launches.

During the quarter, the company launched seven new products and filed five new ANDAs with the USFDA, taking the total filings for H1 FY26 to six. As of September 30, 2025, 75 filings were pending approval, including 73 ANDAs (45 Paragraph IV and 22 "First to File") and two NDAs under Section 505(b)(2).

Europe reported Q2 FY26 revenues of ₹1,380 crore, a 138% YoY and 8% QoQ increase, mainly driven by the NRT portfolio. Excluding NRT, growth was 17% YoY and 12% QoQ. H1 FY26 revenues reached ₹2,650 crore, up 140% YoY. Germany contributed ₹400 crore in Q2 (+23% YoY, +26% QoQ), the UK ₹160 crore (-4% YoY, -10% QoQ), and the rest of Europe ₹120 crore (+35% YoY, +6% QoQ). During the quarter, eight new products were launched.

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India revenues reached ₹1,580 crore in Q2 FY26, up 13% YoY and 7% QoQ, with H1 FY26 revenues at ₹3,050 crore (+12% YoY). Growth was driven by price increases, new launches, and higher volumes. The company launched 11 new brands in Q2, taking the H1 total to 16.

Emerging Markets contributed ₹1,650 crore in Q2 FY26 (+14% YoY, +18% QoQ), with H1 revenues at ₹3,060 crore (+16% YoY). Russia grew 28% YoY to ₹870 crore, CIS and Romania ₹230 crore (+9% YoY), and the Rest of the World ₹550 crore (-2% YoY, +9% QoQ). Q2 FY26 saw 24 new product launches across these markets, totalling 50 in H1 FY26.

Pharmaceutical Services and Active Ingredients (PSAI) posted Q2 FY26 revenues of ₹940 crore (+12% YoY, +16% QoQ) and H1 revenues of ₹1,760 crore (+10% YoY), driven by higher API sales, new product launches, and favourable forex. The company filed 37 DMFs in the quarter, taking the H1 total to 49.

Impairments stood at ₹70 crore, including a one-time ₹50 crore charge related to property, plant, and equipment at the Middleburgh facility. Other operating income was ₹270 crore, and net finance income was ₹80 crore for Q2 FY26.

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As of 30th September 2025, Dr Reddy’s Laboratories reported an operating working capital of ₹13,330 crore. The company’s capital expenditure for Q2 FY26 was approximately ₹510 crore, while free cash flow stood at ₹580 crore after accounting for acquisition-related payouts.

Dr Reddy’s had a net cash surplus of ₹2,750 crore and a net debt-to-equity ratio of -0.08 as of the same date. The company’s annualised return on capital employed (RoCE) for Q2 FY26 was 21.9%.

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