Dr. Reddy's Laboratories reported a steep decline in earnings for the quarter ended March 31, 2026, as lower sales of key products in North America and a one-time inventory-related adjustment weighed heavily on profitability. The pharmaceutical major posted a consolidated net profit of ₹221 crore in Q4FY26, marking an 86% drop from ₹1,587 crore reported in the corresponding quarter last year. Revenue from operations also declined 12% year-on-year to ₹7,516 crore, compared with ₹8,506 crore in Q4FY25. The March quarter numbers were also weaker on a sequential basis, with profit after tax falling 81% from ₹1,190 crore in the December quarter, while revenue slipped 14% from ₹8,727 crore recorded in Q3FY26. Profit before tax (PBT) dropped 90.04% YoY to ₹199.7 crore in Q4 FY26, while EBITDA slipped 60.37% to ₹980.7 crore compared with ₹2,474.9 crore in Q4 FY25. EBITDA margin contracted to 13% in Q4 FY26 as against 29.1% in Q4 FY25, though excluding the one-off adjustment, EBITDA margin stood at 19.5%.
Alongside the results, the Dr Reddy's board recommended a final dividend of ₹8 per share for FY26, which works out to 800% of the face value of Re 1 per equity share. The dividend is subject to approval by shareholders at the upcoming Annual General Meeting. The company has fixed July 10, 2026, as the record date to determine eligible shareholders. This substantial dividend payout comes despite the challenging quarterly performance, highlighting the company's commitment to returning value to shareholders.
The company's performance was affected primarily by lower volumes of Lenalidomide, one of its key oncology products in the United States, along with pricing pressure in North America and European generics markets. In addition, the company recorded a one-time Shelf Stock Adjustment of ₹450 crore related to Lenalidomide, which significantly impacted reported revenue and margins during the quarter. Revenue from North America declined 51% YoY to ₹1,760 crore in Q4 FY26, with the decline largely due to lower Lenalidomide sales and the one-time SSA. Excluding this one-off adjustment, revenues for the segment recorded a 38% YoY decline and 25% sequential decline in Q4 FY26. Revenue from global generics tumbled 13% YoY to ₹6,580 crore during the quarter.
Despite North America weakness, Dr Reddy's demonstrated resilience in other key markets. Revenue from India jumped 20% YoY to ₹1,570 crore in Q4 FY26, driven by revenues from new brand launches, including products from its innovation portfolio, price increases, higher volumes and contributions from recently acquired portfolios. Revenue from Europe increased 14% YoY to ₹1,450 crore during the quarter, while revenue from emerging markets jumped 29% YoY to ₹1,810 crore in Q4 FY26, aided by new launches across markets and higher volumes, further supported by favourable forex movements. On a full-year basis, consolidated net profit tumbled 25.8% to ₹4,196 crore despite a 3.24% jump in revenue from operations to ₹33,700.2 crore in FY26 over FY25.
R&D expenses stood at ₹550 crore during the quarter, registering de-growth of 25% YoY, and accounted for 7.3% of revenue. The decline was mainly due to lower development spending in biosimilars following the completion of major investments related to Abatacept. The company said R&D spending continues to focus on complex generics, peptides and biosimilars. Q4FY26 was also impacted by charges related to certain discontinued CAR-T assets, while FY26 included the one-time new Labour Codes provision. Co-Chairman & MD, G V Prasad noted that the performance reflects the impact of lower lenalidomide sales and several one-offs, with resilience of branded businesses and currency tailwinds helping partially mitigate this impact.
