Dr. Reddy's Q1 Profit Plunges 69% on Semaglutide API Charge; Underlying Business Grows Double-Digits
RDY is trading near its 52-week low of $11.535 (0.5% above the low).
Summary
Dr. Reddy's Q1 FY27 profit dropped 69% YoY due to a ₹2.4B semaglutide API provision, but underlying base business grew double-digits. The company also appointed a new biologics head and Deloitte as its SEC auditor.
Key Events · Earnings and Guidance · RDY
-
Q1 Profit Down 69% on API Charge
Net profit fell to ₹4.4B from ₹14.2B a year ago, dragged by a ₹2.4B provision for semaglutide API inventory and associated costs. Revenue declined 6% YoY to ₹80.7B, largely due to lower lenalidomide sales.
-
Underlying Base Business Grows Double-Digits
Excluding lenalidomide and the semaglutide charge, the base business grew double-digits across all geographies. Branded businesses (India, Emerging Markets, NRT) now account for 52% of revenue.
-
Semaglutide Quality Issue Hits Financials
The ₹2.4B provision stems from out-of-specification batches of semaglutide API, previously disclosed on July 9 and July 15. The charge reduced gross margin by ~3 percentage points to 46.5%.
-
New Biologics Head Appointed
Dr. Sridevi Khambhampaty, former CEO of Shilpa Biologics, appointed as Global Head of Biologics and Senior Management Personnel, effective July 22, 2026, to lead the biosimilars pipeline.
Analysis · RDY · Life Sciences
A ₹2.4 billion provision for out-of-spec semaglutide API inventory sent Dr. Reddy's Q1 FY27 net profit tumbling 69% year-over-year to ₹4.4 billion. Strip out that one-time charge, however, and the underlying base business delivered healthy double-digit growth across all key geographies, with branded businesses now contributing 52% of revenue. The semaglutide quality issue, disclosed earlier this month, has now materialized into a concrete financial impact, while the core generics and biosimilars engine shows resilience. The appointment of a new Global Head of Biologics signals a focus on fixing the biologics pipeline, and the switch to Deloitte as SEC auditor aligns with the previously announced statutory auditor change.
At the time of this filing, RDY was trading at $11.60 on NYSE in the Life Sciences sector, with a market capitalization of approximately $10.4B. The 52-week trading range was $11.54 to $15.67. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.