Is Dr Reddy’s Still a Long-Term Buy After Q2 FY26 Results?
Dr Reddy’s Q2 FY26 Financial Summary
| Metric | Value | YoY / QoQ Change |
|---|---|---|
| Revenue | ₹8,828 Cr | ↑ 10% YoY | ↑ 3% QoQ |
| Net Profit | ₹1,347 Cr | ↑ 7% YoY | ↓ 5% QoQ |
| EBITDA | ₹2,009 Cr | ↓ 3% YoY | ↓ 8% QoQ |
| EBITDA Margin | 22.76% | vs 25.83% YoY | 25.35% QoQ |
Peer Comparison — Q2 FY26
Across the pharmaceutical sector, revenue growth remained steady, but operating margins compressed due to higher costs. Sun Pharma continued to lead on profitability, while Cipla and Lupin showed improvement in domestic formulations. Dr Reddy’s margins were slightly lower, reflecting higher spending on R&D and raw materials.
| Company | Revenue (₹ Cr) | Net Profit (₹ Cr) | EBITDA Margin (%) | YoY Change |
|---|---|---|---|---|
| Dr Reddy’s | 8,828 | 1,347 | 22.8 | ↑ 10% |
| Sun Pharma | 12,840 | 2,485 | 26.1 | ↑ 11% |
| Cipla | 6,314 | 1,060 | 20.8 | ↑ 9% |
| Lupin | 5,520 | 750 | 19.7 | ↑ 8% |
SWOT Analysis — Dr Reddy’s Laboratories
| Category | Details |
|---|---|
| Strengths | Robust global presence; strong US generics portfolio; consistent R&D pipeline; healthy balance sheet. |
| Weaknesses | Margin volatility; dependence on US market pricing; rising R&D and raw material costs. |
| Opportunities | Biosimilar launches, India healthcare expansion, and specialty products pipeline can drive future earnings. |
| Threats | US FDA regulatory scrutiny, patent litigations, and price erosion across major drug categories. |
Layman Explanation and Implications
In simple terms, Dr Reddy’s is earning more than last year, but its profit margins (the money left after all costs) have shrunk because expenses are rising. This means the company’s growth engine is running well, but fuel (costs) is getting expensive. For long-term investors, this indicates that Dr Reddy’s remains stable, though not currently at its most profitable phase. For short-term traders, the upside may be limited unless margins recover in upcoming quarters.
Final Verdict — Long-Term, Short-Term, or Skip?
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Related Queries
- Which Indian pharma company offers better long-term growth potential?
- Will Dr Reddy’s margins improve in the next two quarters?
- How does Dr Reddy’s compare with Sun Pharma in R&D and export strength?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
