Dr Reddy’s shares tumble 7% to 52-week low post muted Q1 earnings; here’s why the pharma stock crashed today

Pharmaceutical major Dr Reddy’s Laboratories share price tumbled 7% to its 52-week low level at the opening bell on Thursday, July 23, as market investors focused on the company’s muted June quarter performance and the decline in revenues from the global generics business.

In the April to June quarter results, Dr Reddy’s posted a major fall in net profits due to the reduction in overall revenues earned in the period, along with the increase in input costs and shrinking margins due to the West Asia conflict.

Shares of Dr Reddy’s dropped 7% to their intraday and 52-week low at the opening bell of ₹1,101 apiece, in comparison with ₹1,182.82 at the previous stock market close, according to NSE data.

After opening 7% lower, the company stock recovered some of its losses and were trading 3.15% lower at ₹1,145.60 on Thursday’s market, compared to the previous market close levels, as per the exchange data.

The pharma major announced its Q1 earnings report after the market operating hours on Wednesday, July 22. However, the shares ended in the negative territory ahead of the financial results release.

Dr Reddy’s muted Q1 performance

In the April to June quarter results for the financial year 2026-27, Dr Reddy’s recorded a 69% fall in its net profits due to shrinking company margins and falling revenues from the global generics business.

The consolidated financial statements showed that the net profits declined 69% to ₹4,435 crore, from ₹14,178 crore in the same quarter of the previous financial year.

On the revenue front, the pharma company recorded a 5.5% drop in the June quarter results to ₹8,070.5 crore, compared to ₹8,545.2 crore in the same period of the previous financial year, as per the statements.

Dr Reddy’s total expenses on cost for the April to June quarter advanced 17% to ₹4,316 crore, from ₹3,682 crore in the same period a year earlier, due to the rising freight cost and other related expenses.

The company also disclosed that it recorded a ₹240 crore ‘Semaglutide API-related impact’ in the period under review, which means that the company spent funds on issues related to the supply, shortages, of the active ingredient which is used for several drugs.

The pharma company’s majority revenue comes from its “global generics business” which recorded a 4.7% decline to ₹7,199.3 crore in the first quarter, from ₹7,562 crore in the same period a year ago.

Within the global generics business, the company’s income from North America (majorly United States) declined 35% YoY, while other emerging markets, India, and Europe revenues witnessed healthy growth.

What do analysts say?

Experts from Citibank said that Dr Reddy’s margins dropped to a multi-year low in the Q1 earnings report, underscoring continued weakness in core profitability. However the analysts also said that strong ex-US growth appears to be increasing due to investments and margin dilutive.

“Management has identified the root cause of semaglutide-related quality issues and expects supply resumption by Nov-26, supporting 2H margin recovery,” said analyst at Citibank.

CLSA analysts estimated Dr Reddy’s to post lower revenue for FY27 due to gSema issue (sales loss of 3m-4m pens & margin estimate for FY27 & moderate them for FY28/FY29.

On the downside risk front, analysts from both JP Morgan and Jefferies said that concerns still remain as any delays or a slower ramp-up can potentially impact the earnings growth in the upcoming period.

Shrinking margins & management focus

The financial statements also showed that Dr Reddy’s EBITDA (earnings before interest, tax, depreciation, and amortisation) margins contracted to 12.5% in the June quarter, from 26.7% in the same period a year earlier.

On a sequential basis, the EBITDA margins contracted by 50 basis points to its first quarter levels, from 13% in the fourth quarter of FY26.

“EBITDA margin further impacted by higher solvent and freight cost arising from Middle East conflict,” the company said.

Dr Reddy’s management attributed the Q1 performance to the expected transition beyond lenalidomide revenues along with an unexpected impact from the Semaglutide API.

Looking ahead, the pharma company management aims to focus on improving the health of our base business.

“Our focus remains on improving the health of our base business through disciplined execution and operational excellence, while building our future pipeline of peptides, biosimilars, and innovative assets to deliver long-term growth,” said G V Prasad, the Co-Chairman and MD of Dr. Reddy’s.

Dr Reddy's share price trend

Dr Reddy shares have gained 6% in the last five years, and have risen nearly 9% in the last three years, according to NSE data. However the company shares have lost 8% in the past one year period.

On a year-to-date (YTD) basis, Dr Reddy stock has lost over 8%, and has dropped 11.6% in the last one month period. The exchange data also showed that the company shares were trading 6% lower in the last five days.

Dr Reddy shares surged to a 52-week high of ₹1,414.90 on June 29, 2026, while the 52-week low was at ₹1,101 on January 21, 2026. The company has a market capitalisation (m-cap) of ₹96,171 crore as of the trading session on Thursday, July 23, 2026.