Dr Reddy's Laboratories share price closed higher in trade today despite the pharma firm reporting a consolidated loss of Rs 569.7 crore in Q3 against profit of Rs 485.2 crore in the corresponding quarter of previous fiscal. Share price of Dr Reddy's Laboratories rose up to 5.92% to Rs 3,207.40 compared to the previous close of Rs 3,028.05 on BSE. It hit a fresh 52-week high today. The pharma stock pared minor gains to end 5.31% higher at Rs 3,188 on BSE.
The large cap stock touched an intra day low of Rs 3,001 on BSE. It has gained after two consecutive days of fall. Dr Reddy's Laboratories share price has gained 19.49% during the last one year. The stock has risen 10.84% since the beginning of this year.
Profit was impacted due to trigger-based impairment charge taken on a few products including gNuvaring which was launched generically in December 2019. Total impairment charge for the quarter ended December 2019 stood at Rs 1,320 crore, of which Rs 1,113.70 crore was used for impairment of gNuvaring and the balance of Rs 206.30 crore was utilised for other product related intangibles.
Imposition of impairment charge is a non-cash event and does not directly affect financials of a company. Companies impose impairment charge when they find that the real value of an asset is worth less than its value in the books. In that situation, the firm takes a write-down in the value of asset.
In terms of an accounting entry, impairment charge is treated as an expense in the profit & loss account. The carrying amount of the asset is reduced by the impairment amount, which reduces the company's net worth or book value. Net profit also takes a hit for that period.
However, consolidated revenue of the company in the December quarter rose 14% to Rs 4,383.8 crore, over Rs 3,850 crore in the year-ago period. The firm reported a 15% on a year-on-year rise in revenues from global generic segment to Rs 3,590 crore.
Operating profit or EBITDA (Earnings before interest, tax, depreciation and amortisation) rose 14.31% to Rs 2,372.2 crore in Q3 compared with Rs 2,075.2 crore in the corresponding period of previous fiscal. The firm reported EBITDA of Rs 2,762 crore in September quarter of current fiscal.
"The current quarter performance has been good across all our businesses and we achieved strong earnings before interest, taxes, depreciation and amortisation (EBITDA) margins," Dr Reddy's Laboratories' co-chairman and MD GV Prasad said.
By Aseem Thapliyal