Dr. Reddy's Q4 Results: Net Profit Drops 86%, Revenue Down on Weak US Sales, Board Recommends 800% Dividend

Dr. Reddy's Laboratories reported a steep decline in earnings for the quarter ended March 31, 2026, as lower sales of key products in North America and a one-time inventory-related adjustment weighed heavily on profitability.

Dr. Reddy's Q4 Results: Profit Slumps 86%, Revenue Drops as North America Business Faces Sharp Pressure

The pharmaceutical major posted a consolidated net profit of Rs 221 crore in the fourth quarter of FY26, marking an 86% drop from Rs 1,587 crore reported in the corresponding quarter last year. Revenue from operations also declined 12% year-on-year to Rs 7,516 crore, compared with Rs 8,506 crore in Q4FY25.

The March quarter numbers were also weaker on a sequential basis. Profit after tax fell 81% from Rs 1,190 crore in the December quarter, while revenue slipped 14% from Rs 8,727 crore recorded in Q3FY26.

800% Final Dividend Payout! Dr Reddy's Recommends, Check Amount & Record Details

Alongside the results, the board recommended a final dividend of Rs 8 per share for FY26, which works out to 800% of the face value of Re 1 per equity share.

The dividend is subject to approval by shareholders at the upcoming Annual General Meeting. The company has fixed July 10, 2026, as the record date to determine eligible shareholders.

Dr. Reddy's Q4 Earnings FY26 Hit by North America Weakness

The company's performance was affected primarily by lower volumes of Lenalidomide, one of its key oncology products in the United States, along with pricing pressure in North America and European generics markets.

One-Time Rs 450 Crore Lenalidomide Shelf Stock Adjustment Further Weighed on

In addition, the company recorded a one-time Shelf Stock Adjustment of Rs 450 crore related to Lenalidomide, which significantly impacted reported revenue and margins during the quarter.

After excluding this one-off adjustment, adjusted revenue for Q4FY26 stood at Rs 7,970 crore. On this basis, revenue was down 6.3% compared with the year-ago period and 8.7% lower than the previous quarter, indicating that underlying business trends were somewhat more stable than the headline numbers suggested.

Dr. Reddy's Laboratories Full-Year FY26 Revenue Grows Despite Quarterly Pressure

Despite the weak March quarter, Dr Reddy's reported modest growth for the full financial year.

Revenue from operations for FY26 rose 3% to Rs 33,593 crore, compared with Rs 32,553 crore in FY25. Excluding the Shelf Stock Adjustment, adjusted annual revenue stood at Rs 34,050 crore, reflecting a stronger 4.6% year-on-year increase.

The company said growth was broad-based across most key geographies, with North America being the primary area of weakness due to lower Lenalidomide sales and the one-time inventory adjustment.

Margins Contract Sharply in Q4

Gross margin for the March quarter declined to 44.8%, down 1,074 basis points from the same period last year and 881 basis points from the December quarter.

The sharp drop was attributed to reduced contribution from Lenalidomide, continued price erosion in developed markets and the one-time Shelf Stock Adjustment.

For the full year, gross margin stood at 52.8%, down 573 basis points from FY25.

However, after adjusting for the Shelf Stock Adjustment and a one-time provision linked to India's new Labour Codes booked in Q3FY26, gross margin improved to 48% for Q4FY26 and 53.5% for FY26, suggesting that the underlying profitability trend remained comparatively resilient.

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