Dr. Reddy's Q2 FY2026 Profit Falls 36% on North America Price Erosion
RDY sits 16% above its 52-week low of $11.36.
Summary
Dr. Reddy's Q2 FY2026 profit fell 36% year over year to Rs. 9,134 million, as North America generics revenue dropped 29% in dollars and semaglutide-related provisions weighed on gross margin.
Key Events · Earnings and Guidance · RDY
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Q2 Profit Down 36% YoY
Profit for the quarter ended September 30, 2026 came in at Rs. 9,134 million versus Rs. 14,268 million a year earlier, while revenue slipped 2% to Rs. 86,708 million.
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North America Revenue Collapses
Global Generics North America revenue fell 29% in U.S. dollar terms for the quarter (Rs. 24,890 million, -23% in INR) and 35% in dollars for the six months, reflecting lower prices and volumes of existing products.
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Semaglutide Provisions Hit Margin
Gross margin fell to 52.1% from 54.7% for the quarter, hit by a Rs. 2,230 inventory provision plus Rs. 167 other costs after semaglutide API was found out of specification, and Rs. 710 for expected returns on a Canadian semaglutide recall.
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Operating Cash Flow Slumps
Net cash from operating activities was Rs. 4,357 million for the six months versus Rs. 30,202 million a year earlier, driven by lower profit and a Rs. 13,741 million working capital drain.
Analysis · RDY · Life Sciences
The headline number is a 36% drop in profit to Rs. 9,134 million for the quarter ended September 30, 2026, driven by a 29% decline in North America generics revenue in dollar terms and gross margin compression to 52.1% from 54.7%. Two one-off items deepened the hit: a Rs. 2,230 inventory provision after semaglutide API was found out of specification, plus a Rs. 710 returns provision tied to a Canadian semaglutide recall. What matters most is operating cash flow of Rs. 4,357 million versus Rs. 30,202 million a year earlier — earnings quality weakened alongside the price erosion, even as India (+17%) and Emerging Markets (+24%) grew.
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At the time of this filing, RDY was trading at $13.22 on NYSE in the Life Sciences sector, with a market capitalization of approximately $10.9B. The 52-week trading range was $11.36 to $15.67. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.