Dr.Reddy'S Laboratories revenue surged on 12.1% in 2015 while EBITDA Margin decreased slightly on 1.9 pp from 25.1% to 23.2%
12-05-2015 • About Dr.Reddy'S Laboratories (
$DRREDDY) • By InTwits
Dr.Reddy'S Laboratories reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company has highly profitable business model: ROIC is at 18.4%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.1x while industry average is 1.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Dr.Reddy'S Laboratories ($DRREDDY) key annual financial indicators
| mln. INR | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 72,368 | 94,329 | 116,266 | 132,170 | 148,189 | 12.1% |
| Gross Profit | | | 60,579 | 75,801 | 85,403 | 12.7% |
| SG&A | | | 33,584 | 38,783 | 42,585 | 9.8% |
| EBITDA | 15,677 | 24,311 | 26,661 | 33,127 | 34,389 | 3.8% |
| Net Income | 9,989 | 13,009 | 16,777 | 21,515 | 22,179 | 3.1% |
Balance Sheet
|
|---|
| Cash | 5,751 | 16,061 | 5,136 | 8,451 | 5,394 | -36.2% |
| Short Term Debt | 18,332 | 15,918 | 24,135 | 24,002 | 28,819 | 20.1% |
| Long Term Debt | 5,322 | 16,372 | 12,625 | 20,740 | 14,307 | -31.0% |
Cash flow
|
|---|
| Capex | 11,539 | 8,814 | 7,557 | 10,831 | | -100.0% |
Ratios
|
|---|
| Revenue growth | -66.2% | 30.3% | 23.3% | 13.7% | 12.1% | |
| EBITDA growth | 147.4% | 55.1% | 9.7% | 24.3% | 3.8% | |
| Gross Margin | | | 52.1% | 57.4% | 57.6% | 0.3% |
| EBITDA Margin | 21.7% | 25.8% | 22.9% | 25.1% | 23.2% | -1.9% |
| Net Income Margin | 13.8% | 13.8% | 14.4% | 16.3% | 15.0% | -1.3% |
| SG&A, % of revenue | | | 28.9% | 29.3% | 28.7% | -0.6% |
| CAPEX, % of revenue | 15.9% | 9.3% | 6.5% | 8.2% | | -8.2% |
| ROIC | 18.6% | 26.0% | 22.0% | 21.5% | 18.4% | -3.1% |
| ROE | 24.0% | 28.8% | 27.3% | 26.3% | 21.9% | -4.3% |
| Net Debt/EBITDA | 1.1x | 0.7x | 1.2x | 1.1x | 1.1x | 0.0x |
Revenue and profitability
The company's Revenue jumped on 12.1% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.89 pp from 32.4% to 31.5% in FY2015.
Gross Margin showed almost no change in FY2015. SG&A as a % of Revenue decreased slightly on 0.61 pp from 29.3% to 28.7% in FY2015.
Net Income marign decreased slightly on 1.3 pp from 16.3% to 15.0% in FY2015.
Return on investment
The company operates at high and attractive ROE (21.95%) while ROIC is a bit lower (18.36%). ROIC decreased on 3.1 pp from 21.5% to 18.4% in FY2015. ROE decreased on 4.3 pp from 26.3% to 21.9% in FY2015.
Leverage (Debt)
Debt level is 1.1x Net Debt / EBITDA and 1.3x Debt / EBITDA. Net Debt / EBITDA showed almost no change in FY2015. Debt decreased on 3.6% in FY2015 while cash dropped on 36.2% in FY2015.
Management team
G V Prasad is a Dr.Reddy'S Laboratories's CEO. G V Prasad has spent 17 years at the company. Dr.Reddy'S Laboratories's CFO Saumen Chakraborty has spent 12 years at the company.
Appendix 1: Peers in Pharmaceuticals
Below you can find Dr.Reddy'S Laboratories benchmarking vs. other companies in Pharmaceuticals industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Granules India ($GRANULES) | | 37.6% | 16.9% | 43.4% | 18.1% |
| Marksans Pharma ($MARKSANS) | -66.6% | 16.7% | 23.3% | 43.3% | |
| Sun Pharmaceutical Industries ($SUNPHARMA) | -87.8% | 39.9% | 40.4% | 42.4% | |
| Torrent Pharmaceuticals ($TORNTPHARM) | -63.5% | 22.7% | 17.7% | 32.2% | |
| Abbott India ($ABBOTINDIA) | -46.4% | 8.2% | 8.7% | 27.3% | |
| |
|---|
| Median (41 companies) | -45.7% | 16.6% | 14.7% | 12.6% | 4.4% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | | 30.3% | 23.3% | 13.7% | 12.1% |
Top companies by Gross margin, %
| Top | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Omega Laboratories ($OMEGALAB) | | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (1 company) | | 46.9% | 0.0% | 0.0% | 0.0% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | | | 52.1% | 57.4% | 57.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Sun Pharmaceutical Industries ($SUNPHARMA) | 34.3% | 40.8% | 44.3% | 44.9% | |
| Divi'S Laboratories ($DIVISLAB) | 38.1% | 37.2% | 38.2% | 40.2% | |
| Venus Remedies ($VENUSREM) | 24.9% | 25.2% | 25.6% | 25.5% | |
| Natco Pharma ($NATCOPHARM) | 21.3% | 21.5% | 23.2% | 24.9% | |
| Ipca Laboratories ($IPCALAB) | 20.0% | 22.3% | 22.6% | 24.8% | |
| |
|---|
| Median (36 companies) | 16.2% | 12.7% | 12.8% | 14.3% | 13.1% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 21.7% | 25.8% | 22.9% | 25.1% | 23.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Granules India ($GRANULES) | 5.3% | 8.8% | 15.2% | 24.3% | 11.4% |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 24.3% | 8.4% | 10.9% | 21.6% | |
| Venus Remedies ($VENUSREM) | 26.6% | 23.2% | 22.2% | 17.5% | |
| Shasun Pharmaceuticals ($SHASUNPHAR) | 4.3% | 10.4% | 15.2% | 15.8% | 11.3% |
| Natco Pharma ($NATCOPHARM) | 20.0% | 24.4% | 16.3% | 14.4% | |
| |
|---|
| Median (28 companies) | 7.3% | 7.7% | 8.3% | 5.7% | 6.5% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 15.9% | 9.3% | 6.5% | 8.2% | |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Alembic Pharmaceuticals ($APLLTD) | | 27.5% | 29.1% | 41.5% | 35.7% |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 18.9% | 24.8% | 31.1% | 35.0% | |
| Marksans Pharma ($MARKSANS) | -25.8% | -142.4% | 34.9% | 33.8% | |
| Torrent Pharmaceuticals ($TORNTPHARM) | 22.3% | 26.4% | 30.5% | 33.2% | |
| Jenburkt Pharmaceuticals ($JENBURPH) | 43.6% | 34.1% | 29.0% | 32.4% | |
| |
|---|
| Median (63 companies) | 13.5% | 13.7% | 13.2% | 14.4% | 6.7% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 18.6% | 26.0% | 22.0% | 21.5% | 18.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Ind-Swift Laboratories ($INDSWFTLAB) | 4.6x | 5.5x | 16.1x | 19.5x | |
| Shasun Pharmaceuticals ($SHASUNPHAR) | 4.5x | 2.8x | 4.5x | 6.0x | 6.2x |
| Sharon Bio-Medicine ($SHARONBIO) | 4.6x | 4.7x | 5.3x | 4.5x | |
| Jubilant Life Sciences Limited ($JUBILANT) | 5.3x | 4.0x | 3.5x | 3.5x | 6.4x |
| Kopran ($KOPRAN) | 6.0x | 4.5x | 3.0x | 3.0x | |
| |
|---|
| Median (50 companies) | 1.6x | 1.6x | 1.4x | 0.3x | 2.2x |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 1.1x | 0.7x | 1.2x | 1.1x | 1.1x |
