Dr. Reddy's Laboratories Limited Q4 2026 Earnings Recap

Shares declined 1.1% following the earnings release as the company reported notable margin contraction and ongoing headwinds from lower lenalidomide sales, which overshadowed positives in the base business growth.

Key Takeaways

• Adjusted revenue declined 6% year-over-year for the quarter, primarily due to a 453 crore INR shelf-stock adjustment on lenalidomide and reduced sales of the product.
• The underlying base business excluding lenalidomide showed double-digit year-over-year growth but could not offset declines in the key segment.
• Gross margin contracted steeply by 760 basis points year-over-year to 48%, driven by lower lenalidomide sales and price erosion in unbranded generics.
• SG&A expenses rose 11% year-over-year to 33% of adjusted revenues, reflecting higher investments in branded franchises and newly acquired consumer healthcare businesses.
• Adjusted EBITDA fell 37% year-over-year to 1,554 crore INR for the quarter, with margin pressure reflecting both product-specific headwinds and increased operating costs.