Dr Reddy’s Labs (DRL) posted poor results for 2QFY2018, which were much lower than expectations. The sales came in at `3,546cr (`3,700cr expected) v/s. `3,586cr, a yoy de-growth of 1.1%. Global Generics at `2,862cr, posted a yoy de-growth of 1.0%, while PSAI at `119cr, registering a yoy de-growth of 2.0%. On operating front, the EBDITA came in at 18.3% (19.7% expected) v/s. 16.2% in 2QFY2017. R&D expenses were at 11.8% of sales in 2QFY2018 v/s. 14.5% of sales in 2QFY2017. Consequently, the PAT came in at `285cr (`594cr expected) v/s. `295cr in 2QFY2017, a yoy de-growth of 3.3%. We maintain our Reduce.

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