Dr Reddy's Laboratories reports 2% rise in Q1 net profit to Rs 1,418 crore, revenue up 11%

Dr Reddy's Laboratories posts ₹1,418 crore net profit in Q1 FY25, up 2% YoY. Revenue increases by 11% to ₹7,394 crore. Analysts optimistic on pipeline and market growth.

Jul 23, 2025 - 20:46
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Dr Reddy's Laboratories reports 2% rise in Q1 net profit to Rs 1,418 crore, revenue up 11%
Dr Reddy's Laboratories posts ₹1,418 crore net profit in Q1 FY25, up 2% YoY. Revenue increases by 11% to ₹7,394 crore. Analysts optimistic on pipeline and market growth.

Hyderabad, July 23, 2025 — Dr Reddy’s Laboratories Ltd., one of India’s leading pharmaceutical companies, reported a modest 2% year-on-year increase in its consolidated net profit for the first quarter of the fiscal year 2025, reaching ₹1,418 crore. The company’s total revenue for the quarter stood at ₹7,394 crore, registering a healthy 11% growth compared to ₹6,750 crore in Q1 FY24.

The results reflect steady performance driven by strong sales in the North America and emerging markets, alongside new product launches and sustained cost optimization efforts.


Strong Operational Momentum

In a statement released to the stock exchanges, Dr Reddy’s said the growth in revenue was supported by robust performance in its generics and active pharmaceutical ingredients (API) segments.

North America, the company’s largest market, contributed ₹3,420 crore — a 12% YoY growth — driven by new product launches, volume growth, and favorable pricing. Emerging markets also performed well, recording a 13% increase, supported by strong sales in Russia and CIS countries.

The India business remained stable with a 7% revenue uptick, while the Europe region saw a double-digit revenue growth of 14%.

“Q1 FY25 was marked by consistent execution across geographies,” said Erez Israeli, CEO of Dr Reddy’s Laboratories. “We have continued to expand our pipeline and strengthen our position in core therapeutic areas, while investing in innovation and R&D.”


EBITDA and Margins Reflect Cost Pressure

The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at ₹2,035 crore, up 3% YoY. The EBITDA margin stood at 27.5%, slightly lower than 28.3% in the corresponding quarter last year. Higher raw material and logistics costs mildly impacted the operating profitability.

Analysts believe the cost headwinds, especially in supply chain and raw material procurement, are being managed well by the company’s backward integration and inventory planning strategies.

“Despite macroeconomic pressures and inflationary trends, Dr Reddy’s has delivered a balanced performance,” said Sushil Kedia, pharma analyst at TrustLine Securities. “The company’s emphasis on operational efficiency and therapeutic focus is yielding steady growth.”


R&D and Product Pipeline

During the quarter, Dr Reddy’s invested ₹420 crore in research and development (R&D), accounting for 5.7% of its revenue. The company filed 14 new abbreviated new drug applications (ANDAs) with the USFDA and received 8 final approvals.

Notably, Dr Reddy’s continues to progress on its biosimilars and complex generics pipeline. The company is also expanding its footprint in specialty pharmaceuticals, with launches in dermatology and oncology segments expected later this fiscal.


Market Reaction and Stock Movement

Shares of Dr Reddy’s closed 1.8% higher at ₹6,272 on the NSE following the earnings announcement, reflecting investor optimism over the company’s growth trajectory and product launches.

The stock has gained nearly 15% year-to-date, outperforming the Nifty Pharma index, which has risen about 10% during the same period.

“Investors are showing confidence in Dr Reddy’s ability to diversify into specialty segments while maintaining strong generics growth,” noted Mira Desai, portfolio strategist at Zenith Capital Advisors. “The company’s earnings are consistent, and its innovation-led pipeline holds long-term promise.”


Outlook for FY25 and Beyond

The management reaffirmed its commitment to sustainable growth through investments in innovation, digital transformation, and operational excellence. The focus remains on expanding the product portfolio in the US, improving market penetration in India, and exploring inorganic opportunities in biosimilars and biologics.

Dr Reddy’s also aims to increase the share of complex generics and high-margin branded formulations in its revenue mix over the next 2-3 years.

Analysts maintain a ‘Buy’ rating on the stock, with an average 12-month price target of ₹6,750, citing a robust pipeline, improving ROCE, and a healthy balance sheet.


Investor Takeaway

With steady earnings growth, expanding market presence, and promising pipeline momentum, Dr Reddy’s Laboratories remains a resilient player in the global pharma landscape. Despite challenges in cost inflation and regulatory timelines, the company’s strategy of diversification, innovation, and market agility is expected to drive consistent value for shareholders.

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