Dr Reddy’s Q4 FY26 profit slides 86%, ₹8 dividend

What Dr. Reddy’s reported for Q4 FY26

Dr. Reddy’s Laboratories reported a sharp drop in profitability for the March-ended quarter (Q4 FY26), with consolidated net profit at ₹221 crore versus ₹1,587 crore a year earlier. That translates to an 86% year-on-year decline. On a sequential basis, profit after tax (PAT) fell 81% from ₹1,190 crore in Q3 FY26. The company said the quarter was affected by specific one-time adjustments, along with weaker sales in some products and geographies. Revenue also came under pressure, with year-on-year and quarter-on-quarter declines reported for Q4.

Revenue trends: Q4 decline, full-year growth

Revenue from operations in Q4 FY26 stood at ₹7,516 crore, down 12% from ₹8,506 crore in the corresponding quarter last year. The topline also declined 14% quarter-on-quarter from ₹8,727 crore in Q3 FY26. Despite the weak quarter, the company reported a higher full-year revenue number. For the year ended March 31, 2026, revenue increased 3% to ₹33,593 crore from ₹32,553 crore in the year-ago period. In a separate disclosure, the company also presented FY26 revenue as ₹33,593.3 crore (₹335,933 million), indicating the same magnitude of annual sales.

One-time adjustments that affected Q4

The company flagged a one-time shelf stock adjustment (SSA) related to generic Lenalidomide in the US, which weighed on Q4 revenue and margins. The disclosed SSA amount was ₹453 crore (₹4,530 million). Dr. Reddy’s also recorded impairments linked to CAR-T assets and Eftilagimod Alfa totalling ₹227.7 crore (₹2,277 million). It additionally reported provisions related to VAT liability of ₹114.1 crore (₹1,141 million) in Q4 FY26. These items were highlighted as major contributors to the quarter’s weaker performance.

Excluding SSA: what changed in reported revenue

Excluding the one-time SSA, consolidated revenues in Q4 FY26 were ₹7,970 crore, a decline of 6.3% year-on-year and 8.7% quarter-on-quarter. For FY26, excluding one-offs, consolidated revenues were ₹34,050 crore, showing 4.6% year-on-year growth. The company also quantified how certain items influenced reported growth and margins. It stated that these items affected revenue growth by 5.3% YoY and 5.2% QoQ in Q4 FY26, and by 1.4% in FY26. The disclosures indicate that the gap between reported and adjusted numbers was meaningful in Q4.

Margin pressure: gross margin fell sharply in Q4

Dr. Reddy’s gross margin for Q4 FY26 was 44.8%, down 1,074 basis points year-on-year and 881 basis points quarter-on-quarter. For FY26, gross margin stood at 52.8%, a decline of 573 basis points YoY. The company attributed the year-on-year decline in the quarter primarily to reduced sales of Lenalidomide, price erosion in North America and Europe generics, and the one-time SSA impact. FY26 margins were also impacted by a one-time provision related to new Labour Codes recorded in Q3 FY26. Excluding the one-offs related to SSA and new Labour Codes, gross margin was disclosed at 48% for Q4 FY26 and 53.5% for FY26.

Key financial metrics disclosed for Q4 and FY26

Along with revenue and profitability, the company disclosed EBITDA and profit before tax (PBT) figures in its results release. Q4 FY26 EBITDA was ₹980.7 crore (13.0% of revenues), while FY26 EBITDA was ₹7,659.5 crore (22.8% of revenues). Profit before tax for Q4 FY26 was ₹199.1 crore (2.6% of revenues), and FY26 PBT was ₹5,481.7 crore (16.3% of revenues). Profit after tax attributable to equity holders was ₹220.1 crore in Q4 FY26 and ₹4,285.0 crore for FY26. These numbers underline how the quarter was disproportionately weak relative to the full-year base.

Segment and geography highlights shared by the company

Dr. Reddy’s disclosed that India operations grew 16% year-on-year to ₹6,218.6 crore (₹62,186 million), supported by new brand launches and portfolio expansion. Europe revenue increased 55% year-on-year to ₹5,550.1 crore (₹55,501 million), supported by contributions from the Nicotine Replacement Therapy (NRT) portfolio. The Global Generics segment, which includes the Biologics business, reported annual revenue of ₹29,903.3 crore (₹299,033 million). The company also highlighted operational milestones during the quarter, including a first-to-market launch of Olopatadine Hydrochloride Ophthalmic Solution (OTC) in the US and the introduction of generic Semaglutide in India. These disclosures indicate continued new product activity despite the financial hit from one-offs.

Dividend: ₹8 per share and July 10 record date

The Board of Directors recommended a final dividend of ₹8 per equity share for FY 2025-26. The payout is subject to shareholder approval at the ensuing Annual General Meeting. The company set July 10, 2026 as the record date for determining eligible shareholders. The dividend recommendation came alongside the results announcement for the quarter and year ended March 31, 2026. Investors will track AGM timelines for the final approval and subsequent payment process.

Earnings call details and investor communication

Dr. Reddy’s said it will host a live Q4 FY26 earnings conference call on May 12, 2026 at 10:00 AM ET, which corresponds to 19:30 IST. The company also shared designated contacts for investor and media relations, reflecting a structured communication plan around results. These calls typically provide management commentary on reported numbers, exceptional items, and business performance drivers, within the disclosures the company is prepared to discuss. The company’s results release noted that the financial statements are under IFRS. The disclosures also included the quantified effects of one-offs on growth and margins.

Market snapshot around the results event

The NYSE listing (RDY) was cited with a closing price of $13.14 on May 11, 2026, down $1.09 (0.64%) in regular trading. Extended trading was shown at $13.64, up $1.49 (3.76%) as of 7:46 PM Eastern. The stock move cited here reflects the data point shared alongside the earnings call listing. Separately, the reported quarter’s results highlighted that one-time items and Lenalidomide-linked adjustments were central to understanding Q4 performance. Investors often compare reported versus adjusted numbers to assess the underlying run rate, especially in quarters with sizeable exceptional impacts.

Why this quarter mattered for investors

Q4 FY26 stood out because the profit decline was steep even as the full year still delivered modest revenue growth. The company explicitly linked the quarter’s pressure to lower Lenalidomide sales, price erosion in key generics markets, and the SSA impact. It also provided both reported and adjusted views of revenue and gross margin, making it easier to see how much of the weakness was tied to exceptional items. The margin compression in Q4 was significant, with gross margin falling to 44.8% versus 55.6% in Q4 FY25 (as disclosed in the margin comparison). The dividend recommendation and record date added a separate, time-bound shareholder event following results.

Conclusion

Dr. Reddy’s posted a weak Q4 FY26, with net profit down 86% YoY and revenue down 12% YoY, while also recommending a final dividend of ₹8 per share with a July 10, 2026 record date. Management flagged the SSA for Lenalidomide, impairments, and certain provisions as key one-time factors affecting the quarter. Full-year revenue still rose to about ₹33,593 crore, supported by growth in India and Europe as disclosed. The company is scheduled to discuss the results in an earnings call on May 12, 2026, where investors are likely to focus on the impact and trajectory of the highlighted one-offs.