Why is Dr Reddy's stock down 7% despite beating the Q3 market estimatesWhy is Dr Reddy's stock down 7% despite beating the Q3 market estimates

Introduction:

Leading drug maker posted its Q3 FY25 results, surpassing market estimates with a 2.5% YoY increase in net profit to ₹1,413.3 crore. The growth was driven by contributions from its recently acquired NRT business, boosting quarterly revenues by 16%.

Also Read: Best Sectors To Watch For Budget 2025

Share price movement of Dr. Reddy’s Laboratories:

On January 24, 2025, Dr. Reddy’s Laboratories Ltd. opened at ₹1,247.95, down 3.21% from its previous close of ₹1,289.35. The stock reached a low of ₹1,203.60 and traded at ₹1,223.72 by 11:20 AM, with a market cap of ₹1,02,733.64 crore.

Dr. Reddy’s Stock Falls Despite Strong Q3:

Dr. Reddy’s Laboratories released its Q3 FY25 results, surpassing market expectations with a 2.5% increase in net profit to ₹1,413.3 crore. The positive performance was driven by contributions from the recently acquired NRT business.

Revenue for the quarter rose 16% year-on-year to ₹8,358.6 crore, primarily boosted by the NRT acquisition. The company’s gross margin stood at 58.7%, slightly up from 58.5% in Q3 FY24 but lower than the previous quarter’s 59.6%.

Despite this growth, concerns were raised over the declining revenue contribution from Revlimid, the blockbuster cancer drug. With the drug’s patent expiring in January 2026, the potential loss of revenue from this product has weighed on investor sentiment.

In terms of expenses, SG&A expenses amounted to ₹2,411.7 crore, showing a 19% YoY increase and a 5% QoQ rise. R&D expenses stood at ₹665.8 crore, or 8.0% of total revenue, reflecting Dr. Reddy’s commitment to innovation.

Although margins were affected by the Revlimid decline, the company’s EBITDA of ₹1,874.2 crore (up 3% YoY) and profit after tax of ₹1,413.3 crore (up 2% YoY) indicated resilience amidst these challenges.

Recent news on Dr. Reddy’s Laboratories:

As of December 24, 2024, Dr. Reddy’s Laboratories announced the establishment of a new wholly-owned subsidiary, Dr. Reddy’s Finland Oy, in Finland. The subsidiary will focus on healthcare and pharmaceutical sectors, including marketing and consulting services for medical devices.

Stock performance of Dr. Reddy’s Laboratories for Period of 1 week, 6 months and 1 year:

Over the past week, the stock of Dr. Reddy’s Laboratories has decreased by 1.53%, while showing a decline of 6.28% over the last six months. However, the company has experienced a 10.1% growth in its stock price over the past year.

Also Read: Stocks To Watch For Budget 2025

Shareholding pattern of Dr. Reddy’s Laboratories:

All values in %	Dec 2024	Sep 2024	Jun 2024
Promoter	26.60%	26.60%	26.70%
FII	26.90%	27.50%	27.70%
DII	36.10%	35.70%	35.30%
Public	10.20%	10.00%	10.20%
Others	0.20%	0.20%	0.20%

About Dr. Reddy’s Laboratories:

Dr. Reddy’s Laboratories Ltd. (NSE: DRREDDY) is a leading Indian pharmaceutical company specializing in generics, biosimilars, and APIs. It offers over 400 high-quality generic drugs, focusing on nervous system, gastrointestinal, and anti-infective treatments.

Disclaimer: The above article is written for educational purposes, and the companies’ data mentioned in the article may change with respect to time The securities quoted are exemplary and are not recommendatory.