Dr. Reddy’s ($RDY) Q2 FY27 Earnings: EPS Beats at INR 11.10 Despite 36% Net Profit Drop

Dr. Reddy’s Laboratories ($RDY) reported mixed second-quarter FY27 financial results, marked by an EPS beat against consensus alongside top-line and margin compression stemming from headwinds in North America.
Financial Performance:
• Revenue: INR 86.7B (-1.5% YoY)
• Diluted EPS: INR 11.10 (vs. Est. INR 8.64)
• Gross Margin: 52.1% (-254 bps YoY)
• EBITDA: INR 17.8B
• Net Profit: INR 9.3B (-36% YoY)
• Free Cash Flow: INR 1.7B | CapEx: INR 1.9B | R&D Spend: INR 5.2B (-16% YoY)
Segment Breakdown:
• Emerging Markets: INR 20.6B (+24% YoY)
• India: INR 18.5B (+17% YoY)
• Europe: INR 13.9B (+1% YoY)
• North America: INR 24.9B (-23% YoY)
• Pharmaceutical Services & Active Ingredients (PSAI): INR 8.3B (-12% YoY)
Operational & Strategic Highlights:
• Commercialized India’s first CDSCO-approved dengue vaccine, QDENGA, via a partnership with Takeda.
• Expanded licensing agreement with Gilead ($GILD) for once-yearly lenacapavir for HIV prevention across 120 countries.
• Secured USFDA approval for its rituximab biosimilar and launched its nivolumab biosimilar in India.
• Received Voluntary Action Indicated (VAI) status from the USFDA following a GMP audit at its Mirfield API site.
• Addressed out-of-specification semaglutide batches caused by an API issue, initiating corrective measures to restore supply stability.
Management highlighted double-digit underlying base business expansion and consolidated EBITDA margins above 20% despite regional pricing and supply-chain normalization.