Transcript of Earnings call recording

Dr. Reddy's Laboratories Ltd. 8-2-337, Road No. 3, Banjara Hills Hyderabad – 500 034, Telangana, India CIN: L85195TG1984PLC004507 Tel: + 91 40 4900 2900 Fax: + 91 40 4900 2999 Email: mail@drreddys.com Web: www.drreddys.com July 28, 2026 National Stock Exchange of India Ltd. (Stock Code: DRREDDY) BSE Limited (Stock Code: 500124) New York Stock Exchange Inc. (Stock Code: RDY) NSE IFSC Ltd. (Stock Code: DRREDDY) Dear Sir/ Madam, Sub: Transcript of the Earnings call conducted on July 22, 2026 Pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, please find enclosed the transcript of the Earnings call for the quarter ended June 30, 2026, conducted on July 22, 2026. Also please note that this transcript of the call has been uploaded on our website and are available at the following link. Weblink: https://www.drreddys.com/cms/sites/default/files/2026- 07/DRL_Q1FY27EarningsCall%20Transcript_22July2026.pdf This is for your information and records. Thanking you. Yours faithfully, For Dr. Reddy’s Laboratories Limited K Randhir Singh Company Secretary, Compliance Officer & Head-CSR Dr. Reddy's Laboratories Limited's Q1FY27 Earnings Call July 22, 2026 MANAGEMENT: MR. EREZ ISRAELI: CHIEF EXECUTIVE OFFICER MR. M. V. NARASIMHAM: CHIEF FINANCIAL OFFICER MS. AISHWARYA SITHARAM: HEAD – INVESTOR RELATIONS Q1FY27 Earnings Conference Call Transcript July 22, 2026 Aishwarya Sitharam: Good day, everyone, and welcome to the Quarter 1 FY27 earnings call of Dr. Reddy's Laboratories Limited. We appreciate your continued interest in our Company. I'm Aishwarya Sitharam, Head of Investor Relations at Dr. Reddy’s. Joining us today are members of the leadership team, Mr. Erez Israeli, our Chief Executive Officer and Mr. M. V. Narasimham (MVN), our Chief Financial Officer. Our quarterly financial results have been published earlier today and are available on our website for your reference. We will start today’s call with MVN providing an overview of our financial performance for the quarter. Following that, Erez will share his insights on key business highlights, as well as the Company’s strategic outlook. We will then open the floor for questions. All commentary and analysis during this call are based on our IFRS Consolidated financial statements. Please note that certain non-GAAP financial measures may also be discussed. Reconciliations to the corresponding GAAP measures are included in our press release. I would like to remind everyone that the ‘Safe Harbor’ provisions outlined in our press release today apply to all forward-looking statements made during this call. Before we proceed, I would like to call out a few housekeeping points. All participants will be in the ‘listen-only’ mode during the opening remarks. Should you need any technical assistance during the call, please use the chat function in your Zoom application. The chat, however, will not be monitored for any questions to the management. This session is being recorded, and both the recording as well as the transcript will be made available on our website shortly. Please note that this call is the proprietary material of Dr. Reddy's Laboratories Limited and may not be rebroadcasted or quoted in any media or public forum, without prior, written consent from the company. With that, let me hand the call over to MVN to present the financial highlights for the quarter. Over to you, MVN. M. V. Narasimham: Thank you, Aishwarya. Greetings to everyone on the call. It is my pleasure to walk you through our financial performance for the first quarter of FY27. The business reported a revenue decline of 5.6% and an EBITDA margin of 12.5% for the quarter, reflecting the impact of lower lenalidomide revenues, which contributed to the corresponding period last year, as well as a provision of ₹240 crores for inventory and other costs associated with the recent semaglutide API related challenges. Notably, the underlying base business, excluding lenalidomide, continued to deliver healthy double-digit growth across all key geographies, including North America, supported by new product launches and favourable currency movements. All financial figures in this section are translated into US dollars, using a convenience translation rate of ₹94.66, the exchange rate prevailing as of June 30, 2026. Q1FY27 Earnings Conference Call Transcript July 22, 2026 Consolidated revenues stood at ₹8,071 crores, which is US$853 million, a decline of 5.6% YoY and a growth of 7.4% on a sequential basis. Strong performance across key markets, further aided by favourable forex, was offset by lower Lenalidomide sales. NRT revenues declined primarily due to the change in operating model post-integration, under which rebates and discounts are offered to distributors and recognized net of revenues, as compared to the transition period when sales were managed by the seller, Haleon. This change in operating model is profit neutral. Consolidated gross profit margin was 46.5%, a decrease of 1,039 basis points YoY and an increase of 169 basis points sequentially. The decline in margins during the quarter was largely on account of lower lenalidomide sales, the semaglutide API related provision mentioned earlier, as well as higher solvent cost on account of the Middle East conflict. The reported gross margin was 51.6% for Global Generics and 4.5% for PSAI. Excluding the semaglutide API related provision mentioned earlier, the overall margin was 49.4%, while that for Global Generics was 53.8% and for PSAI was 12.9%. The SG&A spend was at ₹2,882 crores, an increase of 12% YoY and 4% sequentially, accounting for 36% of revenues. The YoY increase was primarily driven by higher personnel costs due to annual increments, adverse forex movement, targeted investments in the branded businesses, as well as elevated freight costs arising from disruptions related to the Middle East crisis. The R&D spend was at ₹577 crores, declined 8% YoY and up 6% sequentially, accounting for 7.1% of revenues and reflecting lower biosimilars development expenditure as compared to the previous year. The underlying EBITDA, including other income, stood at ₹1,009 crores for the quarter, which is US$107 million, a decrease of 1,416 basis points YoY and 55 basis points sequentially, reflecting a margin of 12.5% of the revenues. Excluding the semaglutide API related provision, the margin was at 15.4%. As a result, the profit before tax was at ₹553 crores, that is US$58 million, representing a margin of 6.8%. Excluding the semaglutide API related provision, the margin was at 9.8%. Effective tax rate for the quarter was 21.3%, compared to 26% in the corresponding period last year. The ETR for the quarter was lower primarily due to reversal of previously recognized tax provisions no longer required consequent to the favourable resolution of tax assessment pertaining to the earlier year and a favourable jurisdictional mix for the quarter, in comparison to the same period in the previous year. Profit after tax attributable to equity holders of the parent for the quarter stood at ₹443 crores, which is US$47 million, a margin of 5.5% on revenues, before adjusting for the semaglutide API related provision mentioned earlier. Diluted EPS for the quarter is ₹5.32. Q1FY27 Earnings Conference Call Transcript July 22, 2026 Operating working capital as of 30th June 2026 was ₹14,353 crores, which is US$1.52 billion, a decrease of ₹81 crores over 31st March 2026. Capex cash outflow for the quarter stood at ₹307 crores, which is US$32 million. Cash flow during the quarter before acquisition related payout was negative ₹216 crores, which is negative US$23 million. As of June 30, 2026, we have a net cash surplus of ₹3,057 crores, i.e., US$323 million. Foreign currency cash flow hedges executed through derivative instruments during the period are as follows. US Dollar 354 million hedged using combination of forwards & risk reversal op [Showing first 8,000 characters — download PDF for full document]