Dr. Reddy's Laboratories Ltd

Ladies and gentlemen, good day and welcome to the quarter three FY25 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Ms. Richa Periwal. Thank you and over to you, ma'am.

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 Q3 FY25 Earnings Conference Call. We have with us the leadership team of Dr. Reddy, comprising Mr. Iraz Izraeli, our CEO, Mr. M.V. Narasimham, our CFO, and the investor relations team. Earlier today, we have released our results and the same is also posted on our website. We will kick off today's call with Ambien taking us to the financial highlights of the quarter. This will be followed by Erase sharing his thoughts on business performance, post which we'll open the forum for Q&A. Please note that today's call is a copyrighted material of Dr. Reddy and cannot be rebroadcasted or attributed in press or media outlet without the company's expressed written consent. This call is being recorded and the playback and the transcript shall be made available on our website soon. All the discussions and analysis of this call will be based on the IFRS Consolidated Financial Statement. The discussion today contains certain non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP measures, please refer to our press release. Before I proceed with the call, I'd 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 MDN.

Thank you, Richa. A warm welcome to all. We continued our growth trajectory and delivered consistent results with a double-digit top line growth and steady margins. While continuing to invest in our R&D, innovation and commercial capabilities, this is the first quarter of consolidation of the acquired nicotine replacement therapy business and this resulted in delivering at again highest our quarterly revenues and EBITDA in Q3 FY25 for the company. Let us look at the financial performance of the quarter. For this section, all amounts have been translated into US dollar at a convenient translation rate of rupees 85.55, which is the rate as of December 31st, 2024. Consolidated revenue for the quarter stood at 8,359 crores, which is US dollar 977 million. a growth of 16% on Euro-year and 4% QOQ. This includes revenues from the acquired NRT business of Rs. 605 crores. Excluding NRT revenues, the underlying growth is at 7.5% on Euro-year basis and a decline of 3% on QOQ. Consolidated gross profit margins stood at approximately 59% for the quarter, an increase of 19 basis points over the same quarter of the previous year and a decrease of 91 basis points sequentially. The year-over-year increase was primarily on account of improvement in product mix and manufacturing overhead leverage, partially offset by price erosion. Gross margins for global thinwicks and PSAI were at 61.3 and 28.6 respectively. The LV&A spend for the quarter was 2412 crores, which is US dollar 282 million, an increase of 19% year-over-year and 5% on QOQ basis. The year-over-year increase was primarily on account of recently acquired NRT business, investment in the new business initiatives, building the capabilities and the higher logistics costs due to increased freight rates. The SMA spent as a percentage to the sales was 28.9% and was higher by 82 basis points on Euro rear and 15 basis points QF2 basis. The R&D spent for the quarter was rupees 666 crores, which is US dollar 78 million. An increase of 20% on year-over-year and decrease of 8% on QOQ. The continued investment in R&D was primarily towards development of complex generics and biosimilars. The R&D span was at 8% of the sales and was higher by 25 basis points on year-over-year and lower by 110 basis points on QOQ basis. We expect the investment to be in the range of 8.5% to 9% for the full fiscal. The EBITDA for the quarter, including other income, was Rs. 2,298 crores, which is US$ 269 million, an increase of 9% on euro-year basis and flat QOQ. The EBITDA margin stood at 27.5% and was lower by 176 basis points on euro-year basis and 95 basis points q2 basis the net finance expense for the quarter is around 2 crores as compared to net income of 96 crores for the same quarter last year primarily on account of unfavorable forex impact and lower interest income post nrp acquisition consideration payout as a result Profit before tax for the quarter stood at Rs. 1,874 crores. That is US dollar 219 million. EBT as a percentage of revenues was at 22.4%. This includes profit before tax from the acquired NRT business of Rs. 1.24 crores. Effective tax rate for the quarter was at 25.1%. Versus 24.5% in the base quarter. We expect our normalized ETR to be around 25%. Profit after tax attributable to the equity holder of the parent for the quarter student. Rupees 1,413 crores, which is US dollar 165 million. A growth of 2% on YY and 13% QOQ. this is at 17 percent of revenue reported eps is rupees 16.94 the eps has been derived on the increased number of shares for the stock split and after non-controlling interest operating working capital as of 31st december 2024 was rupees 12 782 crores which is usd 1.4 uh an increase of Rs 716 crores which is US dollar 84 million over 30th September 2024. CapEx cash outflow for the quarter stood at Rs 709 crores which is US dollar 83 million. Negative cash flows for this quarter was 209 crores which is US dollar 24 million. We have a net cash surplus of Rs 1,603 crores which is US dollar 187 million as of December 31st, 2024. Foreign currency cash flow hedges in the form of derivatives are as follows. US dollar is hedged through structured derivatives, US dollar 285 million for the next quarter at 83.9 and 681 million maturing over the next financial year with minimum production rate of rupees 85.7 to the dollar which also allows participation when use is strengthened. Ruble 1,903 million with a minimum production rate of rupees 0.9 to the ruble maturing in the next three months. With this, I now request Ares to take us through the key business highlights.