Dr Reddy's Q1 FY27 Results: Net Profit Falls 69%; Share Price Slides 9% After Earnings

Dr Reddy's Laboratories shares fell as much as 9% in early trade on Thursday after the pharmaceutical company reported a weak set of June-quarter earnings, with both revenue and profitability declining year-on-year. Investors also reacted to lower global generics sales, a semaglutide API-related charge and continued pressure on operating margins.

Dr Reddy's announced its Q1 FY27 results after market hours on July 22. The company reported a 69% year-on-year decline in consolidated net profit attributable to owners at ₹4,435 crore for the April-June quarter, compared with ₹14,178 crore in the year-ago period.

Revenue from operations declined 5.5% to ₹8,070.5 crore from ₹8,545.2 crore a year earlier, as weakness in the global generics business offset growth in its pharmaceutical services and active ingredients (PSAI) segment.

Total expenses rose 17% year-on-year to ₹4,316 crore from ₹3,682 crore. During the quarter, the company recognised a ₹240 crore impact related to semaglutide API, including inventory provisions and associated costs. Higher solvent prices and elevated freight costs linked to the Middle East conflict also weighed on profitability.

Reported return on capital employed (RoCE) stood at 5.3%, while RoCE excluding the semaglutide API impact came in at 8%. The company ended the quarter with a net cash surplus of ₹3,058 crore.

Dr Reddy's Q1 FY27 Results: Business Performance

Revenue from the global generics business, which contributes the bulk of the company's sales, declined 4.7% year-on-year to ₹7,199.3 crore from ₹7,562 crore in the corresponding quarter last year.

The PSAI business continued to perform better, with revenue rising 8.4% to ₹1,052 crore from ₹970 crore a year earlier.

Dr Reddy's Q1 FY27 Results: Kotak Neo Research View

Kotak Neo Research retained its REDUCE rating on Dr Reddy's with a fair value of ₹1,125, implying limited upside from current levels.

The research house said the company delivered a weaker-than-expected quarter, with adjusted EBITDA coming in around 14% below its estimates. The miss was largely driven by softer North America sales, while operating leverage remained under pressure. Adjusted EBITDA margin also contracted by 160 basis points sequentially to 13.6%.

According to the report, revenue of around ₹8,100 crore was broadly in line with expectations, but North America sales of about $23.6 crore declined 41% year-on-year and 5% sequentially. It also highlighted the limited pace of meaningful ANDA approvals, which continues to constrain earnings growth.

On the positive side, the firm pointed to domestic prescription sales growth of 14.6% year-on-year, outpacing the Indian Pharmaceutical Market (IPM) by 110 basis points. The report also factors in five generic semaglutide entrants in Canada, including Dr Reddy's.

Management remains confident of restoring semaglutide supplies by November 2026 and has reiterated its aspiration of achieving an EBITDA margin of 17-18% in FY27. Kotak Neo Research, however, estimates the margin at 16.4% and expects the company to deliver double-digit growth excluding Revlimid.

The research house said the investment case continues to depend on limited competition in Canada's semaglutide market and the timely launch of Abatacept in the US, leading it to retain its REDUCE rating.

Dr Reddy's Share Price

Dr Reddy's Laboratories shares fell as much as 9% to ₹1,080 on the BSE in early trade on Thursday after the earnings announcement. The stock had closed at ₹1,182.80 on Wednesday, down 1.9% from the previous close of ₹1,206.

Over the past one year, the stock has declined about 5% and is down nearly 6% so far in 2026. It has lost around 8.5% over the past month. Dr Reddy's hit a 52-week high of ₹1,414.90 on June 29, 2026, while its 52-week low of ₹1,148.40 was recorded on January 21, 2026.

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