1QFY27: Miss on margins; optimistic on recovery Quick Note

研报英文原文证据摘录

1QFY27: Miss on margins; optimistic on recovery Quick Note

Global Markets Research

Dr Reddy's Laboratories REDY.NS DRRD IN 23 July 2026

EQUITY: HEALTH CARE & PHARMACEUTICALS

Rating1QFY27: Miss on margins; optimistic on recovery Remains Buy

Target price INR 1,740 RemainsQuick Note

Closing price INR 1,206 21 July 20261QFY27 results: Adjusted EBITDA/PAT ~20% lower than our estimates

DRRD’s 1QFY27 results were weaker than our estimates because of 2% lower revenues

vs our estimates and sticky costs. Adjusted for one-time costs related to semaglutide

production disruption, we estimate EBITDA/PAT were 20%/19% lower than our estimates. Research Analysts

Adjusted EBITDA margin was at 14.3% in 1QFY27 vs our estimate of 17.4% and 4QFY26 India Pharmaceuticals

adjusted EBITDA margin of 16.7%. Higher solvent and freight costs due to the conflict in Saion Mukherjee - NFASL

West Asia had a ~100bp impact on EBITDA margin. The entire benefit of currency saion.mukherjee@nomura.com

movement was not realized because of outstanding cash flow hedges. +91 22 403 74184

Kushal Chovatia - NFASLIn terms of segmental performance: North America Generics (NAG) sales at USD236mn

kushal.chovatia@nomura.comwas lower than our estimate of USD265mn and recorded a USD15mn decline q-q. India

+91 22 403 74013

and Emerging market growth remained strong. India formulation organic growth was

15.5% y-y, and EM growth of 25%+ was supported by favorable currency movement.

Outlook: Optimistic on semaglutide and Abatacept biosimilars

During the company’s post-result conference call, management expressed optimism on

resolving semaglutide production challenges, gaining Abatacept approval and a few

potential relatively high value launches in the US. In addition, with costs rising slower than