FINANCIAL ANALYSIS DR REDDYLABORATORIES

Balance sheet summarises assets owned by a firm..value of these assets and mix of financing [debt and equity] used to finance these assets(.in Rs million or dollars) 2012 Net fixed assets
54169 Or $1003 49237 $911 103406 $1914

2011
56107 Or $1039 36527 $676 92634 $1715

Net current assets Total assets

Inference-net fixed assets have decreased in 2012.however net current assets have increased
Effective as of 1 April 2011, the Company has changed its policy on valuation of inventory from the first-in first-out method (FIFO) to the weighted average cost method (WAC). Under the prior policy, the cost of all categories of inventories, except stores and spares, had been based on the first-in first-out method. Stores and spares consists of packing materials, engineering spares (such as machinery spare parts) and consumables (such as lubricants, cotton waste and oils), which are used in operating machines or consumed as indirect materials in the manufacturing process, had been valued at cost based on a weighted average method. Effective as of 1 April 2011, the cost of all categories of inventory is based on a weighted average cost method. This is a good change as it gives mor accurate estimation of inventory during periods of inflation. LIABILITIES- long term debts have decreased with a modest increase in current liabilities in 2012
2012 Long term debt current liabilities Total liabilities
5605 $103 30623 $567 103406 $1914

2011
6395 $118 26037 $482 92634 $1715

Inference- revenue from operations is 67937($1258). Which is a major part of total revenue.(68215)($1263).Their operating revenue include Sale of spent chemicals,Scrap

sales,Royalty income and.Miscellaneous income. Calculation of return on assets measure operating efficiency Return on Assets Including Revaluations 396.19 It has increased over the years Return on Assets Including Revaluations 396.19 It has increased over the years

355.69 355.69

350.30 350.30

312.17 312.17

286

286

Conclusions the financial report of Dr Reddy is credit worthy and company is worth investing in .However we need to further do valuation of the company to come to a final conclusion

Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability. EBITDA = Operating Revenue Operating Expenses + Other Revenue divided by total revenue. Because EBITDA excludes depreciation and amortization, EBITDA margin can provide an investor with a cleaner view of a company's core profitability. EBITDA Margin 2012 Dr. Reddy 20.32% Teva 24% mylan 19% Par companies 13% novartis 24% Watson pharma 29% Glaxo smith kline 33% merck 29% EBITDA Margins for competitors 2012 After comparison with other major pharmaceutical companies Dr. REDDY Laboratories has an EBITDA MARGIN lower than Novartis,Glaxosmithkline and Merck Therefore EBITDA margins for 2012 are not comparable with others. EBIT MARGIN-A profitability measure equal to EBIT divided by net revenue. This value is useful when comparing multiple companies, especially within a given industry, and also helps evaluate how a company has grown over time.

EBIT Margin Dr. Reddy Teva mylan Par companies novartis Watson pharma Glaxo smith kline merck

2012 14% 18% 11% 9% 21% 20% 30% 14%

This margin allows investors to understand true business costs of running a company, because parts of a company's property, plant, and equipment will eventually need to be replaced as they get used, broken down, decayed, etc. Lower EBIT Margins indicate lower profitability from a company. When comparing against its competitors, investors can determine if lower EBIT margins are due to the competitive landscape (where all companies are having lower margins) or a issue just within the company (where the company is facing lower sales and higher costs). Lower EBIT margins of Dr Reddy Laboratories compared to others indicate that it might be facing either lower sales or higher costs