Any news behind the movement today. None that I could find. Thanks

Disc.: invested

Dr Reddy –

Q3 concall and results highlights –

Revenues -7237 vs 6790 cr
Gross Margins @ 58.5 vs 59.2 pc
EBITDA -2023 vs 1939 cr ( margins @ 28 vs 29 pc )
PAT -1381 vs 1244 cr

R&D spends @ 556 cr ( @ 7 pc of sales, up 15 pc YoY )

Cash on books @ 5900 cr

Region wise sales performance –

North America – 3349 vs 3056 cr, up 7 pc
Europe – 497 vs 430 cr, up 15 pc
India – 1180 vs 1127 cr, up 5 pc
Emerging Mkts – 1283 vs 1309 cr, down 2 pc
APIs + Pharma Services – 783 vs 775 cr, up 1 pc

Acquired the branded portfolio of MenoLabs in US. Its focussed on women health ( basically – health supplements ). The portfolio consists of 07 brands mainly targeting the symptoms of menopause and pre-menopause

Entered into exclusive collaboration with Coya Therapeutics for development and commercialisation of COYA 302 ( a biologic ) – for treatment of Lateral Sclerosis

Hoping for a double digit growth in India business in Q4. Focussing on in-licensing and collaborations to bring innovative products to Indian Mkts. Company is investing significantly behind this initiative

Also launched the innovative – Wearable Medical Device – Nerivio in India in Q3. It’s used for treatment of Migraine. The device is worn on the arm and works on Remote Neuromodulation principles to alleviate migraine symptoms. The device transmits electrical pulses to achieve Neuromodulation. Its a USFDA approved treatment

Generics pricing declines in US are mild to moderate

Company has received 09 product approvals in the China Mkt. 03 of them were received in Q3

Company had earlier acquired Premama Wellness ( in 2022 ) in the US mkts – also focussed on Women’s health. The recent acquisition of MenoLabs adds to company’s presence in Women’s health in the OTC space. That’s where the company intends to expand even more

OTC sales in US already contribute to 10 pc of company’s US sales

Company has a product launch pipeline of 26-27 products to be launched in US over next 2 yrs. This pipeline consists of a healthy mix of ‘tough to make’ and ‘tough to develop’ products

Company intends to launch 06 biosimilars in US by FY 30. First biosimilar launch is planned in FY 27. Company also has a pipeline of additional biosimilars to be launched till FY 35

Dr Reddy’s acquired the US generics business of Australia based Mayne Pharma in Q4 FY 23 for $ 105 million. Company is happy with the acquired portfolio’s performance in US mkts

Company is investing behind building capacities in its CDMO business – which is small right now. But they are seeing good demand trends in the CDMO space

Company has invested a lot in the API and Formulation capacities for GLP-1 products ( these are peptide based medicines ). Intend to launch them across the world mkts ( depending on patent situations – country to country )

Disc: holding, biased, not SEBI registered

all the derivates are commodity products… its just that they have slightly better realisations than caustic soda, so it ultimately reflects in higher margins. The sticky margins and business should imo start once they are deep into the chlorotoluene value chain.

I’m still bullish on this business, positive developments are happening and portion of value added business will keep growing for next few years.
reason I exited are:

1. I don’t know how much more PE can expand
2. Most probably now it will capture growth only
3. If anything go wrong in execution, market can punish the stock price
4. Geo-political events, wars, recession in US can cause worldwide market collapse including Indian markets, So I wanted to be liquid.

In simple words, more risk is now embedded in price than it was for last few years.

You are right, I don’t emphasize much on competition as market will grow rapidly for Type IV CNG, so demand will outpace supply.

I think main triggers are divestment, growth in CNG Cascade & Hydrogen cylinder going forward. (while some of it already reflecting in stock price)

I think more re-rating is possible but I’m not sure when and how much.