1. Dr Reddy’s: Angel Broking maintains ‘NEUTRAL’ rating

Dr Reddy’s: Angel Broking maintains ‘NEUTRAL’ rating

After Dr Reddy's Laboratories reported a nearly three-fold jump in consolidated net profit for the fourth quarter ended March 31, 2017, Angel Broking has maintained its 'NEUTRAL' rating on its stock.

By: | Published: May 12, 2017 6:37 PM
The company posted a net profit after taxes of Rs 337.6 crore for the fourth quarter ended 31 March 2017, against Rs 122.6 crore for the corresponding period of the previous fiscal.

After Dr Reddy’s Laboratories reported a nearly three-fold jump in consolidated net profit for the fourth quarter ended March 31, 2017, Angel Broking has maintained its ‘NEUTRAL’ rating on its stock. The company posted a net profit after taxes of Rs 337.6 crore for the fourth quarter ended 31 March 2017, against Rs 122.6 crore for the corresponding period of the previous fiscal.

However, the consolidated total income of the company declined to Rs 3,632.4 crore for the quarter under consideration as against Rs 3,880 crore for the same period year ago. The net profit for the fiscal year ended March 2017 stood at Rs 1,292.1 crore as against Rs 2,130.6 crore for the previous fiscal.

Consolidated total income of the company stood at Rs 14,367.6 crore for the fiscal year ended March this year. It was Rs 15,863.3 crore for the same period year ago.In a separate filing, the company said its board has recommended a final dividend of Rs 20 per equity share of Rs 5 face value for the financial year 2016-17.

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“The company posted much below expected numbers for its 4QFY2017 results. On top line it posted de-growth of 5.0% YoY to end the period at INR 3,552cr V/s INR 4,020cr expected. The dip in the sales was driven by the Generic sales (INR 2,914cr), which posted a 5% YoY dip, while PSAI (INR 540.1cr), posting a YoY dip of 6.0%. The dip in the Generic market was lead by the USA (INR 1,535cr), a YoY dip of 19%. Europe (INR 206.6cr), posted a YoY growth of 17%, while India (INR 571.1cr) posted a YoY growth of 8.0%. Emerging markets, on the other hand posted a YoY growth of 25.0% to end the period at INR 601.2cr. On the operating front, EBIT margin came in at 7.4% V/s 16.0% expected V/s 13.5% in 4QFY2016, a sharp dip of 6.1% YoY. This was mainly on back of Gross margins which came at 51.2% V/s expected 59.0%, mainly on back of the pressure in the USA business. Thus, PAT came in at INR 312cr V/s INR 484cr expected V/s INR 75cr in 4QFY2016. Given the valuations, we maintain our NEUTRAL rating on the stock,” said Sarabjit Kour Nangra (VP Research- Pharma) in a research note.

Shares of the company fell 2.3% during intraday trade, but later recouped most of the losses and closed at Rs 2,584.70 on the BSE.

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