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Dr. Reddy's Laboratories Ltd. Key Financial Ratios

NSE:DRREDDY | PHARMACEUTICALS

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Profitability Margins

2-year trend showing gross, operating, and net profit margins

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s net profit margin of 11.9% in FY2026 reflects moderate profitability, with operating margin at 16.4% and gross margin at 65.1%.

Understanding Profitability Margins

In FY 2026, Dr. Reddy's Laboratories Ltd. posted a gross margin of 65.1%, an operating margin of 16.4%, a net margin of 11.9%. Gross Margin = (Revenue - COGS) / Revenue; Operating Margin = EBIT / Revenue; Net Margin = Net Income / Revenue. Typical healthy ranges: Gross 20-40%, Operating 10-20%, Net 5-10%+. Consistent or improving margins indicate strong competitive positioning.

Company Performance

2-year trend showing revenue, gross profit, and net profit

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s revenue grew 3.9% to 350.59B in FY2026, but net profit declined 27.4% to 41.58B — indicating margin compression.

Understanding Company Performance

In FY 2026, Dr. Reddy's Laboratories Ltd.'s revenue grew by 3.9% year-over-year. Revenue is total income from operations. Gross Profit is revenue minus cost of goods. Net Profit is the bottom line after all expenses. Consistent growth across all three signals a healthy, expanding business.

Return on Equity (ROE)

2-year trend showing shareholder returns

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s ROE of 10.9% in FY2026 indicates moderate shareholder returns.

Understanding Return on Equity (ROE)

In FY 2026, Dr. Reddy's Laboratories Ltd. reported an ROE of 10.9%. ROE = (Net Income / Shareholders' Equity) x 100. Measures how efficiently the company turns equity into profit. Above 15% is generally strong; above 25% is excellent. Very high ROE may signal high leverage — check alongside debt levels.

Net Income vs Free Cash Flow

2-year trend comparing profitability with cash generation

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s FCF/NI ratio of 0.80x in FY2026 indicates reasonable cash generation relative to profits.

Understanding Net Income vs Free Cash Flow

In FY 2026, Dr. Reddy's Laboratories Ltd.'s free cash flow trailed net income. Free Cash Flow = Operating Cash Flow - Capital Expenditure. When FCF exceeds net income, it suggests high-quality, cash-backed earnings. Persistent gaps may indicate aggressive accounting or heavy capex needs.

Net Income vs Operating Cash Flow

2-year trend comparing profitability with cash from operations

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s OCF/NI ratio of 1.36x in FY2026 indicates strong cash collection and working capital efficiency.

Understanding Net Income vs Operating Cash Flow

In FY 2026, Dr. Reddy's Laboratories Ltd.'s operating cash flow exceeded net income. Operating Cash Flow is the actual cash from core operations. OCF exceeding net income signals strong cash collection. OCF trailing net income may indicate aggressive revenue recognition or working capital issues.

Leverage Ratios

Measure a company's financial leverage, liquidity, and ability to meet financial obligations.

Current Ratio Analysis

2-year trend showing short-term liquidity position

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s current ratio of 1.80x in FY2026 indicates healthy short-term liquidity.

Understanding Current Ratio

In FY 2026, Dr. Reddy's Laboratories Ltd. reported a current ratio of 1.80. Current Ratio = Current Assets / Current Liabilities. Measures short-term liquidity. A ratio of 1.5-3.0 is generally healthy; below 1.0 signals liquidity risk; above 3.0 may indicate underutilized assets.

Interest Coverage Ratio Analysis

2-year trend showing ability to service debt

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s interest coverage ratio of 15.4x in FY2026 indicates comfortable debt servicing capacity.

Understanding Interest Coverage Ratio

In FY 2026, Dr. Reddy's Laboratories Ltd. reported an interest coverage ratio of 15.4x. Interest Coverage = EBIT / Interest Expense. Shows how many times operating profit covers interest payments. Above 5x is comfortable; below 1.5x signals potential difficulty servicing debt.

Debt-to-Equity Ratio Analysis

2-year trend showing financial leverage and capital structure

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s debt-to-equity ratio of 0.20x in FY2026 reflects a conservative, low-leverage capital structure.

Understanding Debt-to-Equity Ratio

In FY 2026, Dr. Reddy's Laboratories Ltd. reported a debt-to-equity ratio of 0.20. Debt-to-Equity = Total Debt / Total Equity. Below 1.0 is conservative; 1.0-2.0 is moderate; above 2.0 indicates higher financial risk. Capital-intensive industries naturally carry higher ratios.

Total Debt Analysis

2-year trend showing total debt with year-over-year changes

FY 2025 - FY 2026

Dr. Reddy's Laboratories Ltd.'s debt increased 65.4% YoY in FY2026 — rising leverage demands close monitoring.

Understanding Total Debt

In FY 2026, Dr. Reddy's Laboratories Ltd.'s total debt increased by 65.4% year-over-year. Total Debt includes short-term debt, long-term loans, debentures, and capital leases. YoY changes (shown as percentages) reveal whether the company is leveraging up or deleveraging.

Shares Outstanding

Year-over-year change in diluted shares outstanding

Dr. Reddy's Laboratories Ltd.'s diluted shares decreased 0.1% YoY in FY2026, indicating shareholder-friendly buybacks.

Over 2 years (FY2025–FY2026), diluted shares decreased 0.1% from 834.18M to 833.33M, reflecting long-term shareholder value creation.

Understanding Shares Outstanding

In FY 2026, Dr. Reddy's Laboratories Ltd.'s diluted shares decreased by 0.1% year-over-year. Diluted Shares accounts for stock options, warrants, and convertibles. Positive YoY change means dilution (red); negative means buybacks (green). Consistent dilution above 5% annually is a red flag.

Data from audited consolidated filings. For educational purposes only — not investment advice. Last update: FY 2026