Dr Reddy’s Lab’s net profit slumped 86 per cent in its fourth quarter ending March 31, 2016, hit by a one-off charge.
India’s second-biggest pharma company reported a net profit of Rs. 75 crore on sales of Rs. 3,756 crore.
Dr Reddy’s Lab wrote down receivables from Venezuela, which had an impact of Rs. 431 crore on its profit.
Analysts polled by NDTV Profit had estimated its net profit atRs. 559 crore on sales of Rs. 3,994 crore.
Dr Reddy’s had reported a net profit of Rs. 519 crore on sales of Rs. 3,870 crore in the corresponding quarter of last fiscal.
“While there has been marginal decline in revenues, there has been a greater impact on our profitability. This is mainly due to the provision made as a matter of abundant precaution, to write down our outstanding receivables from Venezuela,” GV Prasad, chairman and CEO at Dr Reddy’s Lab said in a release to Bombay Stock Exchange.
Higher tax expenses also impacted its bottom line. Tax expenses increased to Rs. 174 crore in Q4 compared to Rs. 74 crore year -on-year. The company provided for deferred tax liabilities worth Rs. 52 crore in Q4 on proposed distribution of profit by a subsidiary.
However, its profitability increased in the March quarter leading to buying in its shares after the earnings announcement. Dr Reddy’s adjusted EBITDA or operating profit margin increased to 24 per cent of revenue, up 100 basis points year-on-year.
Geography wise, its North America and India business reported 12 per cent and 11 per cent growth in revenue, while its Europe and emerging markets business witnessed de-growth of 18 and 31 per cent respectively.
Dr Reddy’s shares closed 3.58 per cent higher at Rs.2,971.45 compared to 0.75 per cent gain in the broader Sensex.