Dr Reddy's Labs Fell 4 Percent As JM Financial Maintained

Dr Reddy's Labs fell 4 percent as JM Financial maintained its sell rating on the stock post earnings.

Adjusting for the many one-offs, Q3FY18 was a soft quarter for Dr Reddy’s. Revenues grew 7 percent QoQ to Rs 3,806 crore largely on account of a one-time milestone income of Rs 130 crore (related to the USFDA NDA approval of IMPOYZ; recently outlicensed to Encore Dermatology) booked under proprietary products.

Adjusting for this milestone income and the US DoJ litigation settlement charges (Rs 31.9 crore), EBITDA margin declined 52bps QoQ to 18.2 percent due to higher price erosion (in low double digits) in base business and adverse forex impact (4 percent depreciation of USD), translating into adjusted EBITDA declining 22 percent YoY to Rs 636.7 crore.

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