Dr Reddy’s Labs posted poor results for 1QFY2018, which were much lower than expectations. The sales came in at `3,316cr (`3,636cr expected) v/s. `3,235cr, a yoy growth of 2.5%. Global Generics at `2,745.5cr, posted a yoy growth of 3.0%, while PSAI at `465.1cr, registered a yoy de-growth of 1.0%. On operating front, the EBDITA came in at 9.2% (16.1% expected) v/s. 11.7% in 1QFY2017. R&D expenses were at 15.3% of sales in 1QFY2018 v/s. 14.8% of sales in 1QFY2017. Consequently, the PAT came in at `59cr (`321cr expected) v/s. `126cr in 1QFY2017, a yoy de-growth of 53.2%. We maintain our neutral.

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