Dr Reddy’s Q4 FY26 profit falls 86% on Revlimid SSA

What happened in Q4 FY26

Dr Reddy’s Laboratories reported a sharp year-on-year fall in profitability for the March quarter of FY26, even as the company pointed to resilience in parts of its base business. Consolidated net profit declined 86.14% to ₹220.9 crore in Q4 FY26, compared with the year-ago quarter. Revenue from operations fell 11.51% to ₹7,546.4 crore. The company said the quarter was impacted by weaker North America performance linked to lower sales of lenalidomide, its generic version of cancer drug Revlimid. A one-time shelf stock adjustment (SSA) related to lenalidomide further reduced reported revenue and profit for the quarter. Favourable foreign exchange movements provided a partial offset to the decline.

Key quarterly numbers investors focused on

Operating profitability also compressed sharply. EBITDA for the quarter was reported at ₹981 crore, and the EBITDA margin fell to 13%. Profit before tax (PBT) dropped 90.04% year-on-year to ₹199.7 crore. Another datapoint highlighted in commentary around the results was that Q4 PBT was just 2.6% of revenue, versus a significantly higher full-year margin profile cited in the same discussion. The combination of weaker US sales and one-off items made Q4 look materially worse than the broader FY26 trend. The company declared a final dividend of ₹8 per share.

The Revlimid (lenalidomide) impact in the US

Management and media reports linked the quarter’s weakness primarily to lenalidomide in the US. North America revenues fell sharply, with one report stating a 51% decline to ₹1,756 crore in Q4 FY26 from ₹3,557 crore in Q4 FY25. The same report said global generics revenues declined 13% to ₹6,580 crore from ₹7,537 crore. Separately, the company’s results coverage attributed the quarter’s decline to a sharp fall in North America revenues due to lower sales of lenalidomide. The shelf stock adjustment related to the product was disclosed as a one-time item of about ₹450 crore (also referenced as ₹453 crore in an earnings-call transcript summary). This adjustment, along with price normalisation and competition, changed the reported picture for the quarter.

One-offs beyond SSA: impairments and provisions

In addition to the SSA, other one-time costs were highlighted in the earnings-call transcript summary and accompanying commentary. An impairment expense of ₹27.7 crore was cited, tied mainly to CAR-T assets and discontinued partnered programs. Provisions were also referenced, including a VAT-related provision of about ₹114.1 crore and an additional expense of about ₹117.0 crore linked to employee benefits following new labour codes in India. These items contributed to the steep fall in reported PBT and net profit. The same transcript summary said that after factoring in these items, adjusted PBT was ₹994 crore for the quarter versus the reported ₹199 crore.

India business offered a counterbalance

While the US generics environment was pressured by lenalidomide, India contributed stronger growth. Revenue from India rose 20% year-on-year to ₹1,566 crore from ₹1,305 crore, driven by new brand launches. This contrast between a weaker North America quarter and improving India performance was a key takeaway from the results coverage. The company also flagged growth in India and emerging markets in investor commentary around the quarter. For investors tracking geographic mix, the India growth provided some offset to the US-specific headwinds.

FY26 performance: revenue up, profit down

On a full-year basis, Dr Reddy’s reported a mixed outcome. One results note said consolidated net profit fell 25.8% to ₹4,196 crore in FY26. Over the same period, revenue from operations increased 3.24% to ₹33,700.2 crore. Another report pegged FY26 consolidated net profit at ₹4,247 crore, reflecting the same broad trend of lower profits despite modest revenue growth. The company’s co-chairman and managing director GV Prasad said FY26 performance reflects the impact of lower lenalidomide sales and several one-offs.

Management commentary: semaglutide launch timeline

On the earnings day, the company released results after market hours. Speaking to reporters, CEO Erez Israeli said Dr Reddy’s will be launching its version of oral semaglutide for India soon. The company received approval from the Drug Controller General of India (DCGI) last month. Israeli did not share an exact date, but confirmed that both launches will take place this month. This update is being watched closely because GLP-1 products are a key theme in global pharma markets and can influence portfolio mix over time.

Market reaction and technical levels being tracked

The stock reaction was muted on the day. Dr Reddy’s shares ended at ₹1,270.10 on the BSE, down about 0.75% to 0.76% in the session. Exchange data cited a 52-week range of ₹1,148.40 to ₹1,379.70, with the price around 7.95% away from the 52-week high in one market snapshot. Separately, technical commentary around the results mentioned support near ₹1,260, reflecting the nearby day range and trading levels. Some market chatter also referenced ₹1,500 as a potential upside level, but this was presented as a technical marker rather than company guidance.

Snapshot table: Q4 FY26 and FY26 reported metrics

What this means for investors tracking US generics

The Q4 outcome shows how product concentration and US pricing dynamics can swing quarterly earnings, especially when combined with accounting adjustments. The lenalidomide shelf stock adjustment and other one-offs pulled reported profitability well below what management described as the underlying base business trend. At the same time, the quarter highlighted that India can provide meaningful growth when supported by new launches. The next set of datapoints investors typically watch after such a quarter include traction in the US business excluding lenalidomide, the cadence of new product launches, and whether margins normalise as one-time items roll off. Dr Reddy’s also signalled continued focus on specialty pipeline themes such as CAR-T and other programs, even as it took impairments on certain assets.

Conclusion

Dr Reddy’s Q4 FY26 print was dominated by lenalidomide-related pressure in North America and a one-time shelf stock adjustment of about ₹450 crore, alongside other provisions and impairments. India revenue growth and the company’s update on an oral semaglutide launch in India provided the main offsets in the narrative. Investors will likely track upcoming launches and the company’s ability to stabilise margins after the quarter’s one-offs, with management commentary on underlying growth expected to remain in focus in subsequent updates.