DRREDDY's Q2 FY27 numbers came in mixed, with revenue of Rs. 8,670.80 Cr (-1.53% YoY) and PAT growth of -35.64% YoY. Here's a quick read of what worked, what to watch, and what management said.
Quick Details| Results date | October 23, 2026 |
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| Quarter | Q2 FY 2026-2027 |
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| Revenue (Q2) | Rs. 8,670.80 Cr (-1.53% YoY) |
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| PAT (Q2) | Rs. 925.00 Cr (-35.64% YoY) |
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| EBITDA margin | 20.56% (-614 bps YoY) |
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| EPS (Q2) | Rs. 11.10 (-35.65% YoY) |
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| Market cap | Rs. 102,623.94 Cr |
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| CMP | Rs. 1,229.50 |
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Quarter Snapshot
Q2FY27 showed a sharp sequential recovery — EBITDA margin of 20.56% (19.49% normalized) met management's ~20% ex-semaglutide guidance and PAT more than doubled QoQ — but YoY declines persist (revenue −1.53%, PAT −35.64%) driven by the lenalidomide cliff in North America. India (+17.3%) and Emerging Markets (+24.5%) grew with India outperforming the IPM, and the US pipeline remains deep with 80 filings pending including 46 Paragraph IV challenges. The swing factor for FY27 is the semaglutide relaunch, where a new Rs.71.0 Cr Canada recall charge was booked and supply resumption is not yet confirmed.
Key Investment Insights
Key Positives
- Sequential recovery: revenue +7.44% QoQ, EBITDA +76.72% QoQ to Rs.1,782.8 Cr, PAT +108.57% QoQ off the Q1FY27 trough
- EBITDA margin of 20.56% (19.49% normalized) met management's ~20% ex-semaglutide guidance with no fresh semaglutide API provision
- India grew 17.3% YoY with secondary sales +21.0% vs IPM +14.7%, rank 8 MQT; Emerging Markets grew 24.5% YoY with Russia at Rs.1,010 Cr (+15% YoY)
- Base business excluding lenalidomide delivered double-digit growth across businesses excluding Europe and API
- North America decline moderated to −23.2% YoY from −41% YoY in Q1, with revenue +12.9% QoQ
- Six US launches in the quarter (12 in H1); 80 filings pending with USFDA including 46 Paragraph IV ANDAs; rituximab biosimilar USFDA approval and first-to-market US sugammadex launch
- Q2 operating cash flow of Rs.1,016.4 Cr was 1.11x Q2 PAT; net cash surplus of Rs.2,502.4 Cr
- Standalone revenue grew 20.66% YoY and standalone PAT grew 79.65% YoY to Rs.695.8 Cr
Risk Factors
- North America revenue fell 23.2% YoY on lower lenalidomide sales; gross margin down 254 bps YoY attributed to the same
- New Rs.71.0 Cr charge booked as expected product returns from the August 2026 Canada semaglutide recall; supplies still not confirmed resumed
- PAT attributable to owners fell 35.64% YoY; EBITDA margin compressed 614 bps YoY to 20.56%
- SG&A rose 6.2% YoY on declining revenue to 32.38% of revenues
- Q2 effective tax rate of 25.60% exceeded the guided 24-25% band due to adverse jurisdictional mix
- PSAI revenue fell 12.1% YoY on lower API volumes; standalone PSAI segment loss widened to −Rs.165.9 Cr from +Rs.6.5 Cr year-ago