Dr. Reddy's Laboratories Limited Q4 2026 Earnings Recap

Shares of Dr. Reddy’s Laboratories declined by 1.1% following the earnings release, reflecting investor caution driven by significant margin compression amid lower lenalidomide sales and persistent price erosion in unbranded generics.

Key Takeaways

• Adjusted revenue declined 6% year-over-year for the quarter, mainly due to lower lenalidomide sales; however, the base business excluding lenalidomide sustained double-digit growth.
• Gross margin fell sharply by 760 basis points YoY to 48%, pressured by weaker product mix and price erosion in generics.
• EBITDA declined 37% year-over-year to INR 1,554 crores, with the margin contracting to 19.5% on adjusted revenues.
• One-off impacts included a significant shelf-stock adjustment of INR 453 crores and impairment charges totaling INR 259 crores largely from discontinued R&D programs and in-licensed assets.
• SG&A expenses rose 11% year-over-year, reflecting investments to support the branded franchise and consumer healthcare expansion, while R&D spend decreased 26% from last year’s quarter due to completion of key biosimilars investments.