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Indian pharmaceutical company Dr Reddy's Laboratories saw its share price climb 3.1% to ₹1,312 on Wednesday after releasing its latest financial results. The company recorded its highest-ever revenue from operations in Q2FY25, reflecting a year-on-year (Y-o-Y) growth of 16.5%, with total revenue reaching ₹8,016.1 crore. This recent performance has caught the attention of investors looking to buy shares online.

Profit after tax declines despite revenue growth

Despite the significant revenue growth, Dr Reddy's reported a 9.5% Y-o-Y decline in profit after tax (PAT), which stood at ₹1,341.9 crore in Q2FY25. The drop in PAT was due to one-time adjustments, including costs associated with the acquisition of Haleon plc's global Nicotine Replacement Therapy (NRT) portfolio (excluding the United States), tax adjustments, and a transfer of minority interest related to a joint venture with Nestlé. 

For those considering whether to buy shares online, it's worth understanding these unique impacts on profitability.

Global growth driven by key markets and new launches

The company's revenue growth was primarily driven by volume increases and new product launches across major markets. North America, a key segment, saw 17% Y-o-Y growth, while Russia expanded 19%, and the rest of the world (ROW) markets grew by 33%. The India market, in turn, posted an 18% Y-o-Y growth rate in Q2FY25, drawing interest from individuals aiming to buy shares online in top-performing sectors.

Strategic initiatives and growth expectations for FY25

Dr Reddy's management anticipates sustained growth in the US over the next 1-2 years, largely led by its flagship product, Revlimid. In the domestic market, double-digit growth is expected in FY25, driven by expanding into key therapeutic areas, an increase in in-licensing opportunities, and the introduction of higher-value products. 

These include new chemical entities (NCEs), biosimilars, peptides, and speciality drugs for global markets. Investors who plan to buy shares online are closely watching how these efforts may impact the company's growth trajectory.

Building a diverse product portfolio

Dr Reddy's is actively building a differentiated product portfolio to serve its focus markets. As part of this strategy, the company acquired the global NRT portfolio from Haleon plc (excluding the US) and established a joint venture with Nestlé to expand its nutraceutical offerings. 

Additionally, Dr Reddy's has enhanced its manufacturing capabilities for GLP-1 products and is developing a biosimilar pipeline for regulated markets. For those considering whether to buy shares online in the pharmaceutical sector, these initiatives could signal long-term growth opportunities.

Earnings outlook remains uncertain beyond FY27

While Dr Reddy's earnings appear stable over the next two years, analysts remain cautious about the company's ability to maintain this trajectory beyond FY27. The revenue stream from Revlimid, which has been a key growth driver, is expected to face increased competition by Q4FY26, potentially impacting core earnings growth. For individuals interested in the stock market and exploring options to buy shares online, it's essential to consider the potential challenges facing Dr Reddy's in sustaining its growth.

In addition to competitive pressures, Dr Reddy's efforts to commercialise its differentiated portfolio are expected to take time before achieving significant financial returns. With concerns over pipeline visibility for new products that can drive growth beyond FY27, those looking to buy shares online may need to weigh both the current performance and the future potential of the company.

Recent stock movement and comparison to a broader market

At 10:19 AM on Wednesday, Dr Reddy's stock traded at ₹1,303.95, a 2.47% increase. This compares with a 0.68% rise in the BSE Sensex, which reached 80,020.35 at the same time. This recent surge reflects investor optimism in the short term, but for those looking to buy shares online, the company's long-term outlook remains a critical consideration.