Call Start: 09:00 January 1, 0000 10:05 AM ET

Dr. Reddy's Laboratories Limited (NYSE:RDY)

Q2 2023 Earnings Conference Call

October 28, 2022 09:00 ET

Company Participants

Amit Agarwal - Head of Investor Relations & Director of Finance

Parag Agarwal - Chief Financial Officer

Erez Israeli - Chief Executive Officer

Conference Call Participants

Tarang Agarwal - Old Bridge Capital

Prakash Agarwal - Axis Capital

Kunal Dhamesha - Macquarie Capital

Damayanti Kerai - HSBC

Surya Patra - Philip Capital

Sameer Baisiwala - Morgan Stanley

Operator

Ladies and gentlemen, good day, and welcome to Q2 FY '23 Earnings Conference Call of Dr. Reddy's Laboratories Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Amit Agarwal. Thank you, and over to you, sir.

Amit Agarwal

Thank you. A very good morning, and good evening to all of you, and thank you for joining us today for the Dr. Reddy's earnings conference call for the quarter ended September 30, 2022.

Earlier during the day, we have released our results and the same are also posted on our website. This call is being recorded, and the playback and transcript shall be made available on our website soon. All the discussion and analysis of this call will be based on the IFRS consolidated financial statements. To discuss the business performance and outlook, we have the leadership team of operative comprising Mr. Erez Israeli, our CEO; Mr. Parag Agarwal, our CFO; and the Investor Relations team. Please note that today's call is a copyrighted material of Dr. Redis and cannot be rebroadcasted or attributed in press or media outlets without the company's express written consent.

Before I proceed with the call, I would like to remind everyone that the safe harbor contained in today's press release also pertains to this conference call.

Now, I hand over the call to Mr. Parag Agarwal, over to you, sir.

Parag Agarwal

Thank you, Amit, and greetings to everyone for the current festive season. This quarter, we had strong financial performance with higher server sales, PBT and EBITDA in our quarter. The performance has been supported by the launch of lenalidomide capsules in the U.S. and rebound of Russia performance over last quarter.

Let me take you through the details for the quarter. For this section, all the amounts are translated into U.S. dollar at a continuous translation rate of INR81.37, which is the rate as of September 30, 2022. Consolidated revenue for the quarter stood at INR6,306 crores, that is US$775 million and grew by 9% year-on-year basis and by 21% on a sequential quarter basis. In the same quarter of last year, we had high coverage product sales, adjusted for which we have grown in high teens in this quarter. Consolidated gross profit margin for this quarter stood at 69.1%, an increase of 55 basis points over previous year and 920 basis points sequentially. The gross margins were mainly aided by favorable product mix and production linked incentive recognition. However, it was partially offset by a provision made on COVID product inventory as the sales on these products have reduced significantly. Gross margin for the global generics and PSAI businesses were at 65.4% and 3.6%, respectively, for the quarter.