Synopsis:- Weighed down by a one-time lenalidomide shelf stock adjustment of Rs. 453 crore in North America, Dr. Reddy’s Laboratories reported a muted Q4 FY26 on paper, but its India, Europe, and Emerging Markets businesses posted double-digit growth, pointing to a company whose geographic diversification is doing real work.
One bad quarter does not define a company, and Dr. Reddy’s FY26 results make that argument fairly clearly. The Hyderabad-based pharmaceutical major came into focus after reporting its Q4 and full-year numbers on May 12, 2026, with headline figures dragged lower by a specific one-time charge that distorted the broader picture. Peel that away, and what emerges is a business whose geographic diversification is quietly doing real work.
With a market capitalization of Rs. 1,06,000 crore, the shares of Dr. Reddy’s Laboratories were trading at Rs. 1,269 per share, with a 52-week range of Rs. 1,379 to Rs. 1,143. It is trading at a P/E of 25x.
Q4 FY26: Overview
Dr. Reddy’s Q4 FY26 numbers carry an asterisk. Reported revenues came in at Rs.7,516 crore, down 12% year-on-year, with EBITDA falling to Rs.981 crore at a 13% margin and PAT at Rs.220 crore, down 86% YoY. The culprit was a Rs.453 crore shelf stock adjustment on lenalidomide, plus a Rs.228 crore impairment on CAR-T and a licensed asset, and a Rs.114 crore VAT provision. Strip those out, and the picture shifts: revenues at Rs.7,969 crore, EBITDA margin at 19.5%, and PBT margin at 12.5% a business that is fundamentally healthy underneath the noise.
FY26: Base Business Held Its Ground
The full year told a steadier story. Reported revenues reached Rs.33,593 crore, up 3% year-on-year, while EBITDA is down by 17% to Rs.7,659 crore at a 23% margin. PAT came in at Rs.4,285 crore, down 24%. Excluding the lenalidomide SSA, revenues stood at Rs.34,046 crore, growing 4.6%. The balance sheet remained a quiet strength with a net cash surplus of Rs.3,271 crore and RoCE at 16%, rising to 17.5% on a clean basis. For a year defined by one fading blockbuster, the underlying engine held up well.
Why North America Had a Rough Quarter
The North American business posted revenues of Rs.1,756 crore in Q4FY26, a fall of 51 percent year-on-year. The primary culprit was lenalidomide, a cancer drug whose generic exclusivity window has effectively closed. Sales dropped sharply, and the company took a Rs. 453 crore shelf stock adjustment, essentially writing down inventory that can no longer be sold at prior prices.
Stripping that out, North American revenues stood at Rs.2,209 crore, a more modest but still meaningful 38 percent YoY decline. The full-year North America number came in at Rs.11,374 crore, down 22 percent. Lenalidomide, once a windfall product, is now a headwind, and the market has been pricing that in for a while.
Where the Growth Actually Came From
Outside North America, the story looked considerably different. India delivered revenues of Rs.1,566 crore in Q4, growing 20 percent year-on-year and outpacing the Indian pharmaceutical market’s growth of 11.6 percent. The company launched 10 new brands in the quarter alone and now holds the number nine rank in IPM by moving the annual total.
Two launches stood out: Obeda, its generic semaglutide injection for Type 2 diabetes making Dr. Reddy’s the first company to receive DCGI approval and launch on day one of patent expiry, and the entry into hormone replacement therapy through the Progynova brand acquisition.
Europe posted Rs. 1,452 crore in Q4, up 14 percent, aided by new product launches and favorable currency movement. The NRT business, acquired last year, contributed Rs.696 crore from the region, with integration now 95 percent complete by value. Emerging markets came in at Rs.1,806 crore, up 29 percent YoY, led by Russia, where Dr. Reddy’s grew at 15.9 percent against a market growth of 9.5 percent. New launches in Russia and the rest of the world, along with forex support, drove the outperformance.
Verdict
Dr. Reddy’s FY26 results are best read with a pencil, not a highlighter. The headline numbers are noisy, but the underlying business across India, Europe, and Emerging Markets is in better shape than the reported PAT suggests. With lenalidomide now firmly in the rearview and geographic engines firing, the investment case rests on whether new launches, particularly in biosimilars and the Indian market, can fill the gap over the coming quarters.
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