H1FY27
Filed Oct 23, 2026Dr. Reddy’s reported H1FY27 revenues of ₹ 167,413 Mn and profit attributable to equity holders of ₹ 13,685 Mn under IFRS.
Q2FY27 EBITDA margin recovered to 20.6% and branded businesses grew, but H1FY27 revenue, EBITDA, profit before tax and profit attributable to equity holders declined year over year, principally amid lower lenalidomide sales in North America.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q2FY27 Revenuesother | ₹86.71B | 7 | (2 ) |
| H1FY27 Revenuesother | ₹167.4B | – | (4 ) |
| Q2FY27 Cost of Revenuesother | ₹41.50B | (4 ) | 4 |
| H1FY27 Cost of Revenuesother | ₹84.67B | – | 10 |
| Q2FY27 Gross Profitother | ₹45.20B | 20 | (6 ) |
| H1FY27 Gross Profitother | ₹82.74B | – | (14 ) |
| Q2FY27 Gross Marginother | 52.1% | increase of 562 bps | decline of 254 basis points (bps) |
| H1FY27 Gross Marginother | 49.4% | – | decline of 635 bps |
| Q2FY27 Selling, General & Administrative Expensesother | ₹28.07B | (3 ) | 6 |
| H1FY27 Selling, General & Administrative Expensesother | ₹56.90B | – | 9 |
| Q2FY27 Research & Development Expensesother | ₹5.24B | (9 ) | (16 ) |
| H1FY27 Research & Development Expensesother | ₹11.00B | – | (12 ) |
| Q2FY27 Impairment of Non-Current Assets, netother | ₹123M | 720 | (81 ) |
| H1FY27 Impairment of Non-Current Assets, netother | ₹138M | – | (79 ) |
| Q2FY27 Other (Income)/Expense, netother | −₹912M | 8 | (66 ) |
| H1FY27 Other (Income)/Expense, netother | −₹1.76B | – | (49 ) |
| Q2FY27 Results from Operating Activitiesother | ₹12.68B | 235 | (28 ) |
| H1FY27 Results from Operating Activitiesother | ₹16.47B | – | (53 ) |
| Q2FY27 Finance (Income)/Expense, netother | ₹329M | (119 ) | (143 ) |
| H1FY27 Finance (Income)/Expense, netother | −₹1.41B | – | (40 ) |
| Q2FY27 Profit before Income Taxother | ₹12.28B | 122 | (33 ) |
| H1FY27 Profit before Income Taxother | ₹17.80B | – | (52 ) |
| Q2FY27 Income Tax Expense/(Benefit)other | ₹3.14B | 167 | (23 ) |
| H1FY27 Income Tax Expenseother | ₹4.32B | – | (52 ) |
| Q2FY27 Profit for the Periodother | ₹9.13B | 110 | (36 ) |
| H1FY27 Profit for the Periodother | ₹13.48B | – | (52 ) |
| Q2FY27 Profit attributable to Equity Holders of Parent Co.other | ₹9.25B | 109 | (36 ) |
| H1FY27 Profit attributable to Equity Holders of the Parent Co.other | ₹13.69B | – | – |
| Q2FY27 Diluted Earnings per Share (EPS)other | ₹ 11.10 | 109 | (36 ) |
| H1FY27 Diluted Earnings per Share (EPS)other | ₹ 16.42 | – | (52 ) |
| Q2FY27 EBITDAnon-GAAP | ₹17.83B | increase of 77% | decline of 24% |
| H1FY27 EBITDAnon-GAAP | ₹27.91B | – | decline of 40% |
| Q2FY27 EBITDA Marginnon-GAAP | 20.6% | – | – |
| H1FY27 EBITDA Marginnon-GAAP | 16.7% | – | – |
| Q2FY27 Capital Expenditureother | ₹1.9B | – | – |
| Q2FY27 Free Cash Flownon-GAAP | ₹1.7B | – | – |
| Q2FY27 Net cash generated from operating activitiesother | ₹10.16B | – | – |
| Operating Working Capital as on 30th September 2026non-GAAP | ₹146.5B | – | – |
| Net Cash Surplus as on 30th September 2026non-GAAP | ₹25B | – | – |
| Net Debt to Equity as on 30th September 2026non-GAAP | (0.06) | – | – |
| Q2FY27 Annualized Return on Capital Employed (RoCE)non-GAAP | 9.5% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Q2FY27 Global GenericsAccounting for 90% of Q2FY27 consolidated revenues. | ₹77.93B | 8 | (1 ) |
| H1FY27 Global GenericsAccounting for 90% of H1FY27 consolidated revenues. | ₹149.9B | – | (3 ) |
| Q2FY27 North AmericaDecline was largely due to lower lenalidomide sales. | ₹24.89B | 13 | (23 ) |
| H1FY27 North AmericaDecline was largely due to lower lenalidomide sales. | ₹46.94B | – | (29 ) |
| Q2FY27 Emerging MarketsGrowth was largely driven by new launches across markets, further aided by favourable forex. | ₹20.59B | 12 | 24 |
| H1FY27 Emerging MarketsGrowth was largely driven by new launches across markets, further aided by favourable forex. | ₹38.92B | – | 27 |
| Q2FY27 IndiaGrowth was driven by revenues from new brand launches, supported by price increases, volume growth, and contributions from recently acquired portfolios. | ₹18.51B | 8 | 17 |
| H1FY27 IndiaGrowth was driven by revenues from new brand launches, supported by price increases, volume growth, and contributions from recently acquired portfolios. | ₹35.68B | – | 17 |
| Q2FY27 EuropeNew generic product launches and favourable currency movements were partially offset by pricing pressure in generics; NRT revenues declined primarily due to continued impact of operating model change post-integration. | ₹13.94B | (3 ) | 1 |
| H1FY27 EuropeNew generic product launches and favourable currency movements were partially offset by pricing pressure in generics. | ₹28.38B | – | 7 |
| Q2FY27 Pharmaceutical Services and Active Ingredients (PSAI)Lower volume uptake in the API business was partially offset by double digit growth in CDMO business and currency tailwinds. | ₹8.31B | (2 ) | (12 ) |
| H1FY27 Pharmaceutical Services and Active Ingredients (PSAI)Lower volume uptake in the API business was partially offset by double digit growth in CDMO business and currency tailwinds. | ₹16.83B | – | (5 ) |
| Q2FY27 OthersNo driver disclosed. | ₹471M | 145 | 357 |
| H1FY27 OthersNo driver disclosed. | ₹664M | – | (62 ) |
| Q2FY27 RussiaGrowth was aided by acquisitions, price increases and favorable currency movements. | ₹10.1B | 12% | 15% |
| H1FY27 RussiaGrowth was aided by acquisitions, price increases and favorable currency movements. | ₹19.1B | – | 21% |
| Q2FY27 Other CIS countries and RomaniaFavourable currency movements were the key driver of growth. | ₹2.6B | 21% | 13% |
| H1FY27 CIS and RomaniaFavourable currency movements were the key driver of growth. | ₹4.8B | – | 12% |
| Q2FY27 Rest of World (RoW)Growth was led by new product launches across countries, aided by favourable currency tailwinds. | ₹7.9B | 11% | 44% |
| H1FY27 RoWGrowth was led by new product launches across countries, aided by favourable currency tailwinds. | ₹15B | – | 43% |
| Q2FY27 NRTRevenues declined primarily due to continued impact of operating model change post-integration. | ₹6.6B | flat | decline of 6% |
| H1FY27 NRTRevenues declined primarily due to continued impact of operating model change post-integration. | ₹13.1B | – | decline of 4% |
| Q2FY27 GermanyNo driver disclosed. | ₹3.9B | decline of 3% | decline of 1% |
| H1FY27 GermanyNo driver disclosed. | ₹8B | – | growth of 12% |
| Q2FY27 UKNo driver disclosed. | ₹1.9B | decline of 16% | growth of 24% |
| H1FY27 UKNo driver disclosed. | ₹4.3B | – | growth of 29% |
| Q2FY27 Rest of EuropeNo driver disclosed. | ₹1.5B | decline of 2% | growth of 20% |
| H1FY27 Rest of EuropeNo driver disclosed. | ₹3B | – | growth of 24% |
What drove it
- Underlying base business, excluding lenalidomide in North America, continued to deliver double-digit growth across businesses, excluding Europe and API, further supported by favourable currency movements.
- Branded businesses, namely India, Emerging Markets and the acquired consumer health portfolio in Nicotine Replacement Therapy, accounted for 53% of Q2FY27 revenues and 52% of H1FY27 revenues.
- Q2FY27 gross margin improved sequentially after Q1FY27 was affected by a ₹2,397 Mn provision towards inventory and associated costs related to semaglutide API.
- SG&A expense increased year over year primarily due to higher personnel costs, including increments, adverse currency movement and elevated freight outward costs due to supply chain disruptions arising from the Middle East crisis.
- R&D expenditure was lower due to reduced development spends in generics.
- APSL generated revenues of $100+ million in the 12 months ended September 2026.
Concerns
- Lower lenalidomide sales in North America drove the revenue decline and the year-over-year decline in gross margin.
- Certain batches of semaglutide were found to be out of specification due to an issue associated with the API used in the product; measures are being taken to ensure product quality and resumption of supplies.
- The USFDA issued a Form 483 with three observations following a PAI and GMP inspection at FTO-SEZ Process Unit-02 and a Form 483 with four observations following a GMP inspection at FTO-3.
- PSAI revenue declined due to lower volume uptake in the API business.
- Europe faced generic pricing pressure, while NRT was affected by the operating model change post-integration.
What to watch
- Resumption of semaglutide supplies following the API-related product quality issue.
- North America lenalidomide sales and the contribution from six Q2FY27 product launches and 12 H1FY27 product launches.
- The 80 filings pending USFDA approval as of September 30, 2026, including 77 ANDAs and three NDAs filed u/s 505(b)(2).
- Execution against USFDA Form 483 observations at the Srikakulam and Bachupally facilities.
- Whether double digit CDMO growth continues to offset lower API volume uptake.
Balance sheet and cash flow
- Cash & Cash Equivalents and Other Investments as on 30th Sep 2026: ₹ 86,670 Mn; as on 30th Jun 2026: ₹ 91,508 Mn; as on 30th Sep 2025: ₹ 74,393 Mn.
- Loans and Borrowings (Current & Non-Current) as on 30th Sep 2026: ₹ 72,287 Mn; as on 30th Jun 2026: ₹ 71,952 Mn; as on 30th Sep 2025: ₹ 58,539 Mn.
- Trade Receivables as on 30th Sep 2026: ₹ 101,399 Mn; Inventories: ₹ 81,182 Mn; Trade Payables: ₹ 36,082 Mn.
- Property, Plant, and Equipment as on 30th Sep 2026: ₹ 115,097 Mn; Goodwill and Other Intangible Assets: ₹ 117,145 Mn; Equity: ₹ 389,370 Mn.
- Q2FY27 Free Cash Flow before Acquisitions: ₹ 1,705 Mn; Free Cash Flow: ₹ 1,705 Mn.
Analysis
Dr. Reddy’s reported H1FY27 consolidated revenue of ₹ 167,413 Mn, versus ₹ 173,503 Mn in H1FY26, while Q2FY27 revenue was ₹ 86,708 Mn versus ₹ 88,051 Mn. The central demand issue was North America, where Q2FY27 revenue was ₹ 24,890 Mn and H1FY27 revenue was ₹ 46,938 Mn. The company attributed the declines largely to lower lenalidomide sales. It stated that the underlying base business excluding North America lenalidomide delivered double-digit growth across businesses other than Europe and API.
Growth was concentrated in branded markets. Emerging Markets grew 24 in Q2FY27 and 27 in H1FY27, while India grew 17 in both periods. These businesses, together with the acquired consumer health NRT portfolio, accounted for 53% of Q2FY27 consolidated revenue and 52% of H1FY27 revenue. Europe recorded limited Q2 growth and PSAI declined, with generic pricing pressure, the NRT operating model transition and lower API volume uptake constraining those businesses.
Profitability improved substantially from Q1FY27 but remained well below the preceding year. Q2FY27 gross margin was 52.1%, compared with 46.5% in Q1FY27, and EBITDA margin was 20.6%, compared with 12.5%. The company noted that Q1FY27 was affected by a ₹2,397 Mn semaglutide API-related inventory and associated-cost provision. Against Q2FY26, gross margin declined to 52.1% from 54.7%, and EBITDA declined to ₹ 17,828 Mn from ₹ 23,511 Mn. Lower North America lenalidomide sales, higher SG&A costs and an adverse tax jurisdictional mix weighed on year-over-year earnings.
H1FY27 profit before income tax was ₹ 17,803 Mn versus ₹ 37,397 Mn, and H1FY27 diluted EPS was ₹ 16.42 versus ₹ 34.26. The balance sheet showed ₹ 86,670 Mn of cash and cash equivalents and other investments, ₹ 72,287 Mn of loans and borrowings, and a reported net cash surplus of ₹25.0 billion as of September 30, 2026. Q2FY27 free cash flow was ₹1.7 billion and capital expenditure was ₹1.9 billion.
The filing did not provide forward financial guidance. Operational attention remains on resolution of the semaglutide product-quality issue, North American launch and filing execution, and remediation of the cited inspection observations. The release also identified a strategic long-term manufacturing and supply agreement secured by APSL and reported $100+ million of APSL CDMO revenue in the 12 months ended September 2026.
Management, verbatim
We continued to improve the overall health of our business, delivering double-digit base business growth and EBITDA margins of over 20% during the quarter. We remain focused on strengthening our core businesses, enhancing productivity, and investing in strategic growth platforms to deliver consistent performance, while creating long-term value drivers.
G V Prasad, Co-Chairman & MD
Not in the filing
stated, not guessed- Forward financial guidance was not provided.
- Previous-release outlook was not provided.
- Dividend and share-repurchase information was not provided.
- Operating cash flow comparisons for prior-year and prior-quarter periods were not provided.
- Free cash flow comparisons for prior-year and prior-quarter periods were not provided.
- H1FY27 profit attributable to equity holders year-over-year change is not used because the printed table's '(1 )' does not agree with the reported values, while separate commentary states a decline of 52%.
- Debt maturity schedule was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.