Dr. Reddy's Q4 hit by ₹453cr lenalidomide hit, but base business grows double-digit
Management struck a cautiously optimistic tone, citing strong base business momentum and semaglutide approvals, but the massive lenalidomide shelf-stock adjustment blindsided analysts.
What management said
- ₹453 crore shelf-stock adjustment for lenalidomide surprised management; not planned
- Semaglutide approved in Canada, launched in India; expects 6-7 million units by end of CY26
- Adjusted EBITDA margin of ~20% for Q4; targets 25% margin aspirationally
The brief
Dr. Reddy's Q4 FY26 revenue fell 6% YoY to ₹7,969 crore adjusted, dragged by a surprise ₹453 crore shelf-stock adjustment for lenalidomide. Excluding that product, the base business delivered double-digit growth. Gross margin slipped to 48% on adjusted revenue due to product mix, but management expects gross margins above 50% in FY27. Adjusted EBITDA margin came in around 20%. The company secured Canada approval for semaglutide and launched it in India; it expects to sell 6-7 million units by end of calendar 2026. Capex for FY27 is guided at around ₹2,000 crore. The verdict: a quarter distorted by a one-off, but the underlying trajectory and new product pipeline, especially semaglutide, support a cautious constructive outlook.
In their words
“We were also surprised by this. It was not part of any arrangement or anything like that.”— Erez Israeli — Chief Executive Officer
“Prior launches of products offering meaningful opportunity, BD and continued cost optimization efforts will take us closer to our aspiration [25% EBITDA margin].”— Erez Israeli — Chief Executive Officer
Summarised from the Dr. Reddy's Laboratories Q4 2026 earnings-call transcript. View transcript.