Dr Reddy's Laboratories Q4 Profit Slumps 86% To ₹220 Crore As Lenalidomide Adjustment, Impairments Weigh On Margins

Mumbai: Dr. Reddy's Laboratories reported an 86% year-on-year decline in consolidated net profit attributable to shareholders at ₹220.1 crore for Q4 FY26, compared with ₹1,593.9 crore in the corresponding quarter last year, as lower Lenalidomide sales, a one-time shelf stock adjustment and impairment charges hurt profitability. Consolidated revenue fell 11.6% YoY to ₹7,516.2 crore from ₹8,506 crore. Sequentially, revenue declined 13.9% from ₹8,726.8 crore in Q3 FY26, while profit dropped 81.8% from ₹1,209.8 crore.

The pharmaceutical major said quarterly performance was impacted by a ₹453 crore shelf stock adjustment related to generic Lenalidomide in the US market, impairment charges linked to CAR-T therapy assets and Eftilagimod Alfa, and additional VAT-related provisions. Gross margin narrowed sharply to 44.8% in Q4 FY26 from 55.6% a year ago and 53.6% in the previous quarter. EBITDA declined 60% YoY to ₹980.7 crore, while EBITDA margin contracted to 13% from 29.1% in Q4 FY25.

Sequentially, selling, general and administrative expenses rose to ₹2,776.2 crore from ₹2,691.8 crore in Q3, partly due to provisions related to VAT liabilities in a foreign subsidiary. The company also recorded impairment charges of ₹258.6 crore during the quarter against ₹27.1 crore in Q3 FY26. Profit before tax fell 87% quarter-on-quarter to ₹199.1 crore. Despite the sharp decline in earnings, the company reported a tax benefit of ₹21.4 crore during the quarter due to recognition of deferred tax assets and a favourable jurisdictional mix.

Co-Chairman and Managing Director G V Prasad said the year’s performance reflected lower Lenalidomide sales and several one-off impacts, though branded businesses and currency tailwinds partly offset the pressure. During the quarter, the company launched generic Semaglutide injection in India under the Obeda brand and received regulatory approvals in Canada and India for semaglutide-related products. The board recommended a final dividend of ₹8 per equity share for FY26.

For the full financial year FY26, consolidated revenue rose 3.2% YoY to ₹33,593.3 crore, while profit attributable to shareholders declined 24.2% to ₹4,285 crore. Full-year EBITDA stood at ₹7,659.5 crore compared with ₹9,213.3 crore in FY25. India business revenue grew 16% during FY26, while Emerging Markets rose 23%, partially offsetting weakness in North America. The company ended FY26 with a net cash surplus of ₹3,271.4 crore and return on capital employed of 15.8%.

Dr. Reddy’s crossed ₹33,500 crore in annual revenue despite pressure in North America, supported by growth in India, Europe and Emerging Markets businesses during FY26.

Disclaimer: This article is based on the company’s regulatory filing for Q4 FY26. It is for informational purposes only and does not constitute investment advice or a recommendation.