Dr. Reddy's Laboratories vs Lupin Q4 FY26

Dr. Reddy's Q4 FY26 revenue (ex-SSA) was INR 7,969 crore, down 6% YoY, dragged by a INR 453 crore lenalidomide shelf-stock adjustment. EBITDA margin of 19.5% (adjusted) missed the 25% aspirational target, impacted by lower gross margins (48%) and higher SG&A. The base business (ex-lenalidomide) grew double-digits. Management expects FY27 gross margins above 50% and EBITDA margins near 25% as semaglutide launches ramp up. Key risks include delayed semaglutide approvals (Brazil) and competitive pricing erosion in U.S. generics.

Guidance read

FY27 gross margin above 50%: Management expects gross margins to improve above 50% in FY27, driven by semaglutide launches and cost improvement programs. FY27 EBITDA margin near 25% with semaglutide: EBITDA margin is expected to approach 25% in FY27, aided by semaglutide sales, though may be slightly below. FY27 R&D spend 7%-8% of revenue: R&D expenditure is expected to be in the range of 7%-8% of adjusted revenue in FY27. FY27 CapEx around INR 2,000 crore: Capital expenditure for FY27 is guided at approximately INR 2,000 crore, primarily for biosimilars and product-specific investments.

Risk read

Key risks include Semaglutide approval delays in Brazil — Brazil approval for semaglutide is delayed by 3-4 months, which could impact FY27 unit sales guidance of 12 million units.; Lenalidomide shelf-stock adjustment recurrence — A surprise INR 453 crore shelf-stock adjustment hit Q4 revenue; similar customer-driven adjustments could recur.; U.S. generics price erosion — U.S. generics revenue has been flat despite new launches, indicating significant price erosion that may continue.; CAR T and partnered asset discontinuation — Impairment of INR 135 crore on CAR T and INR 93 crore on partnered asset (Immutep) highlights R&D pipeline risk..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.

LU

Lupin

Q4 FY26 · Diversified

Lupin delivered a stellar Q4 FY26 with revenue of ₹7,475 crore (+32% YoY) and EBITDA of ₹2,171 crore (+68% YoY), marking the 15th consecutive quarter of growth. The US business was a standout, reaching $1.31 billion for the full year (+40% YoY), driven by complex generics like Tolvaptan and Mirabegron. India prescription business grew 14.5% YoY, outperforming IPM. Management guided for high single-digit revenue growth and ~25% EBITDA margin in FY27, factoring in competition on key products and higher R&D spend. Key risks include potential generic competition for Mirabegron and Tolvaptan, and inflationary pressures from global trade disruptions.

Guidance read

FY27 Revenue Growth: High Single Digit: Management expects high single-digit revenue growth in rupee terms for FY27. FY27 EBITDA Margin: ~25%: EBITDA margin guided to around 25% for FY27, down from 29.7% in FY26, factoring in competition and higher R&D. R&D Spend: ~8% of Sales in FY27: R&D expenditure expected to be around 8% of sales for the next fiscal year. US Business: Sustain >$1B in FY27: US revenue expected to remain above $1 billion in FY27 despite competition, supported by new launches.

Risk read

Key risks include Mirabegron Competition — A third player has settled and may enter the market, potentially pressuring Lupin's market share and margins.; Tolvaptan Patent Expiry — Patent expiry in September 2026 could bring generic competition, impacting US revenue.; Inflationary Pressures — Rising freight and raw material costs due to geopolitical tensions could impact margins, though management has factored this into guidance.; Dapagliflozin 505(b)(2) Launch Delay — Challenges in achieving product PK for the Dapagliflozin 505(b)(2) could delay launch beyond FY27..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.