Mumbai: Dr. Reddy’s Laboratories reported a 14.4 percent year-on-year decline in consolidated net profit to Rs 1,210 crore in Q3 FY26, even as revenue grew 4.4 percent YoY to Rs 8,727 crore. The quarterly earnings were down from Rs 1,437 crore in Q2 and Rs 1,413 crore in Q1, reflecting a tapering momentum despite top-line growth. The company attributed margin pressures and lower Lenalidomide sales as key contributors to the drop.
Q3 revenue climbs despite profit drop
Dr. Reddy’s posted consolidated revenues of Rs 8,727 crore for the December quarter, up from Rs 8,359 crore a year ago. Sequentially, however, revenue dipped marginally from Rs 8,805 crore in Q2 FY26. Net profit came in at Rs 1,210 crore, down from Rs 1,437 crore in Q2 and Rs 1,413 crore in Q3 FY25. The gross margin narrowed to 53.6 percent from 58.7 percent a year earlier, largely due to price erosion and a one-time labour code provision.
Sequential growth moderates amid higher expenses
On a quarter-on-quarter basis, operating expenses rose to Rs 73,030 crore, up from Rs 70,539 crore in Q2, due to elevated selling, R&D and administrative costs. SG&A expenses stood at Rs 2,692 crore (30.8 percent of revenue), and R&D outgo was Rs 615 crore. EBITDA for Q3 fell to Rs 2,049 crore from Rs 2,351 crore in Q2, with margins slipping to 23.5 percent from 26.7 percent. Adjusted for the one-off provision, EBITDA margin stood at 24.8 percent.
Management insight: Strategic execution continues
Co-Chairman and MD G.V. Prasad highlighted that Q3 growth was led by branded businesses and favorable forex trends, which helped offset Lenalidomide decline. He reaffirmed focus on core execution pillars: base business expansion, pipeline acceleration, operational efficiency, and select inorganic opportunities. Diluted EPS for Q3 stood at Rs 14.52 versus Rs 17.25 in Q2 and Rs 16.94 in Q3 FY25. The company launched 30 new products in Q3 and completed a biosimilar BLA filing for abatacept.
Nine-month performance steady, margin pressure visible
For 9M FY26, revenue rose 8.4 percent YoY to Rs 26,077 crore, while net profit remained flat at Rs 4,065 crore. EPS for the nine-month period was Rs 48.78, broadly in line with Rs 48.68 in 9M FY25. R&D spend moderated slightly to 7.1 percent of revenue. Return on capital employed (RoCE) for Q3 stood at 20.4 percent, with a net cash surplus of Rs 3,070 crore, indicating continued financial strength despite margin contraction.
Disclaimer: This article is based on the company’s regulatory filing for Q3 FY26. It is for informational purposes only and does not constitute investment advice or a recommendation.
