Dr.Reddy'S Laboratories EBITDA surged on 16.2% and EBITDA Margin increased on 2.6 pp from 23.2% to 25.8%
12-05-2016 • About Dr.Reddy'S Laboratories (
$DRREDDY) • By InTwits
Dr.Reddy'S Laboratories reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts: The company has highly profitable business model: ROIC is 18.9%.
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 4.4%. Revenue decline was accelerating on average at -6.3 pp per annum in the last 5 years. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 6.1 pp from 20.4% to 26.5% in FY2016.
Gross Margin increased on 2.0 pp from 57.6% to 59.6% in FY2016. SG&A as a % of Revenue increased slightly on 0.80 pp from 28.7% to 29.5% in FY2016.
Net Income margin decreased on 2.0 pp from 15.0% to 12.9% in FY2016. During the last 5 years Net Income margin topped in FY2014 at 16.3% and was declining since that time.
Return on investment
The company operates at good ROIC (18.9%) and ROE (16.7%). ROIC increased slightly on 0.56 pp from 18.4% to 18.9% in FY2016. ROE decreased on 5.2 pp from 21.9% to 16.7% in FY2016. ROIC declined at -1.8 pp per annum in the last 5 years. ROE stuck to a declining trend at -3.0 pp per annum in FY2012-FY2016.
Leverage (Debt)
Debt level is 0.7x Net Debt / EBITDA and 0.8x Debt / EBITDA. Net Debt / EBITDA dropped on 0.4x from 1.1x to 0.7x in FY2016. Debt dropped on 22.3% while cash decreased on 8.8%.
Dr.Reddy'S Laboratories has short term refinancing risk: cash is only 21.6% of short term debt.
Management team
Dr.Reddy'S Laboratories's CEO G V Prasad has spent 19 years with the company. Saumen Chakraborty is a Dr.Reddy'S Laboratories's CFO. Saumen Chakraborty has spent 14 years at the company.
Financial and operational results
Dr.Reddy'S Laboratories ($DRREDDY) key annual financial indicators| mln. INR | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 94,329 | 116,266 | 132,170 | 148,189 | 154,708 | 4.4% |
| Gross Profit | | 60,579 | 75,801 | 85,403 | 92,281 | 8.1% |
| SG&A | | 33,584 | 38,783 | 42,585 | 45,702 | 7.3% |
| EBITDA | 24,311 | 26,661 | 33,127 | 34,389 | 39,962 | 16.2% |
| Net Income | 13,009 | 16,777 | 21,515 | 22,179 | 20,013 | -9.8% |
Balance Sheet
|
|---|
| Cash | 16,061 | 5,136 | 8,451 | 5,394 | 4,921 | -8.8% |
| Short Term Debt | 15,918 | 24,135 | 24,002 | 28,819 | 22,828 | -20.8% |
| Long Term Debt | 16,372 | 12,625 | 20,740 | 14,307 | 10,685 | -25.3% |
Cash flow
|
|---|
| Capex | 8,814 | 7,557 | 10,831 | | | |
Ratios
|
|---|
| Revenue growth | 30.3% | 23.3% | 13.7% | 12.1% | 4.4% | |
| EBITDA growth | 55.1% | 9.7% | 24.3% | 3.8% | 16.2% | |
|
|---|
| Gross Margin | | 52.1% | 57.4% | 57.6% | 59.6% | 2.0% |
| EBITDA Margin | 25.8% | 22.9% | 25.1% | 23.2% | 25.8% | 2.6% |
| SG&A, % of revenue | | 28.9% | 29.3% | 28.7% | 29.5% | 0.8% |
| Net Income Margin | 13.8% | 14.4% | 16.3% | 15.0% | 12.9% | -2.0% |
| CAPEX, % of revenue | 9.3% | 6.5% | 8.2% | | | |
|
|---|
| ROIC | 26.0% | 22.0% | 21.5% | 18.4% | 18.9% | 0.6% |
| ROE | 28.8% | 27.3% | 26.3% | 21.9% | 16.7% | -5.2% |
| Net Debt/EBITDA | 0.7x | 1.2x | 1.1x | 1.1x | 0.7x | -0.4x |
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 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Mangalam Drugs & Organics ($MANGALAM) | 16.6% | -18.2% | -2.1% | 79.8% | - |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 39.9% | 40.4% | 42.4% | 70.2% | - |
| Lyka Labs ($LYKALABS) | 41.9% | -25.7% | -22.6% | 68.7% | - |
| Marksans Pharma ($MARKSANS) | 16.7% | 23.3% | 43.3% | 26.8% | - |
| Torrent Cables ($TORRCABS) | 27.5% | 17.4% | -42.9% | 26.5% | - |
| |
|---|
| Median (41 companies) | 16.6% | 14.7% | 12.6% | 8.6% | 15.3% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | - | 23.3% | 13.7% | 12.1% | 4.4% |
Top companies by Gross margin, %
| Top | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Omega Laboratories ($OMEGALAB) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| |
|---|
| Median (1 company) | 46.9% | 0.0% | 0.0% | 0.0% | 0.0% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | - | 52.1% | 57.4% | 57.6% | 59.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Divi'S Laboratories ($DIVISLAB) | 37.2% | 38.2% | 40.2% | 37.4% | - |
| Hester Biosciences ($HESTERBIO) | - | - | - | 32.9% | - |
| Sun Pharmaceutical Industries ($SUNPHARMA) | 40.8% | 44.3% | 44.9% | 29.2% | - |
| Natco Pharma ($NATCOPHARM) | 21.5% | 23.2% | 24.9% | 26.2% | - |
| Marksans Pharma ($MARKSANS) | -27.2% | 15.0% | 18.1% | 23.2% | - |
| |
|---|
| Median (53 companies) | 12.7% | 12.8% | 14.3% | 12.0% | 18.8% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 25.8% | 22.9% | 25.1% | 23.2% | 25.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Claris Lifesciences ($CLARIS) | 58.1% | 42.9% | - | 103.1% | 15.8% |
| Wintac ($WINTAC) | - | - | - | 22.8% | - |
| Hester Biosciences ($HESTERBIO) | - | - | - | 21.5% | - |
| Ipca Laboratories ($IPCALAB) | 11.2% | 8.3% | 11.6% | 17.8% | - |
| Natco Pharma ($NATCOPHARM) | 24.4% | 16.3% | 14.4% | 14.1% | - |
| |
|---|
| Median (32 companies) | 7.7% | 8.3% | 5.7% | 6.1% | 9.4% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Marksans Pharma ($MARKSANS) | -142.4% | 34.9% | 33.8% | 41.2% | - |
| Alembic Pharmaceuticals ($APLLTD) | 27.5% | 29.1% | 41.5% | 35.7% | 62.1% |
| Jenburkt Pharmaceuticals ($JENBURPH) | 34.1% | 29.0% | 32.4% | 35.3% | - |
| Abbott India ($ABBOTINDIA) | 29.6% | 26.9% | 30.5% | 34.2% | - |
| Divi'S Laboratories ($DIVISLAB) | 30.6% | 30.4% | 32.3% | 30.5% | - |
| |
|---|
| Median (63 companies) | 13.7% | 13.2% | 14.4% | 13.0% | 13.1% |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 26.0% | 22.0% | 21.5% | 18.4% | 18.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Jubilant Life Sciences Limited ($JUBILANT) | 4.0x | 3.5x | 3.5x | 6.4x | - |
| Shasun Pharmaceuticals ($SHASUNPHAR) | 2.8x | 4.5x | 6.0x | 6.2x | - |
| Claris Lifesciences ($CLARIS) | 1.9x | 1.1x | 1.8x | 3.2x | 2.9x |
| Dishman Pharmaceuticals & Chemicals ($DISHMAN) | 3.6x | 2.6x | 2.3x | 2.9x | - |
| Neuland Laboratories ($NEULANDLAB) | 4.2x | 3.5x | 2.6x | 2.6x | - |
| |
|---|
| Median (48 companies) | 1.6x | 1.4x | 0.3x | 0.0x | 1.2x |
|---|
| Dr.Reddy'S Laboratories ($DRREDDY) | 0.7x | 1.2x | 1.1x | 1.1x | 0.7x |
