Dr Reddy's Laboratories Q2 Preview: Moderate Growth Expected; US Sales to Down 6%, India Business to Rise 8%

Leading Indian pharmaceutical major Dr Reddy's Laboratories, is expected to post moderate year-on-year growth in the September 2025 quarter (Q2 FY26). The company's performance is likely to be driven by robust domestic demand and expanding contributions from its inorganic portfolio in Europe, even as challenges persist in the US market due to declining Revlimid sales and continued price erosion in key generics.

Dr Reddy's Laboratories Q2 Results 2026 Preview

Analysts anticipate that while revenues and earnings may see modest improvement, profitability could remain under strain due to gross margin compression and steady operating costs. The company's domestic segment, along with strategic acquisitions, is expected to act as a cushion against global pricing challenges.

HDFC Securities Projects 6% Decline in US Sales, 8% Growth in India Operations

According to HDFC Securities, Dr Reddy's US business is expected to decline by about 6% quarter-on-quarter, primarily impacted by lower gRevlimid sales and continued price and market share erosion in the base portfolio. On the other hand, the India business is forecasted to grow around 8% year-on-year, aided by GST-related benefits in September 2025.

The brokerage has also factored in a Rs 670 crore contribution from the NRT business. Despite this, HDFC Securities expects gross margins to contract, and with operating costs remaining stable, EBITDA margins could come under pressure, leading to a dip in profitability for the quarter.

ICICI Securities Notes Positive USFDA Inspections and Strategic Updates

Meanwhile, ICICI Securities highlighted key regulatory and strategic developments ahead of the results. The USFDA completed GMP and pre-approval inspections across several of Dr Reddy's manufacturing facilities, including formulations and biologics units, with some observations noted but no major compliance issues.

Importantly, the company's API plants in New York and Telangana were classified as VAI (Voluntary Action Indicated) by the USFDA, reflecting a satisfactory level of compliance.

On the expansion front, Dr Reddy's announced a definitive agreement to acquire the STUGERON brand from Janssen Pharmaceutica NV for USD 50.5 million, broadening its product portfolio across 18 markets in the Asia-Pacific (APAC), EMEA, and the Middle East regions.

The company also revealed the appointment of Deloitte Haskins & Sells LLP as its statutory auditor starting from FY26-27, reinforcing its focus on governance and transparency.

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