Corporate Earnings Diverge: Kotak Mahindra Bank Q2 Profit Jumps 29.5%, Dr. Reddy’s Falls 36%
Mumbai, October 26: Two of India’s closely watched September-quarter earnings reports pointed in opposite directions. Kotak Mahindra Bank posted a sharp profit increase on strong loan growth and lower provisions. Dr. Reddy’s Laboratories reported a steep decline as sales of its generic cancer drug in the US kept shrinking.
Kotak: growth and cleaner books, but thinner margins
Kotak Mahindra Bank’s net profit rose 29.5% year on year to ₹4,212 crore in the September quarter, from ₹3,253.3 crore a year earlier. Net interest income rose 15.7% to ₹8,459 crore, and operating profit rose 21.1% to ₹6,382.2 crore. On a consolidated basis, profit rose 26% to ₹5,645 crore. The standalone gain was helped by lower provisions.
Credit growth was strong. Net advances grew 25% year on year to ₹5,77,295 crore, and gross NPAs fell to 1.04%.
Margins were the weak spot. Net interest margin declined to 4.31%, from 4.54% a year earlier and 4.53% in June. The bank mobilised ₹55,344 crore of FCNR(B) deposits under a Reserve Bank of India concessional swap facility during the quarter, which pressed core profitability. The consolidated result beat market expectations.
Dr. Reddy’s: a high base unwinds
Dr. Reddy’s reported a 36% year-on-year fall in consolidated net profit to ₹925 crore for the second quarter of 2026-27, attributing the decline mainly to lower lenalidomide sales in North America. Profit was ₹1,437 crore a year earlier, when generic Revlimid sales had provided a significant boost.
Revenue slipped 1.5% to ₹8,671 crore, EBITDA fell 24% to ₹1,783 crore, and profit before tax dropped 33% to ₹1,228 crore. North America revenue fell 23% to ₹2,489 crore.
The company pointed to underlying strength. Its North America base business, excluding lenalidomide, grew 12.4%, against market growth of 2.4%, on volumes and new launches. North America revenue rose 13% from the previous quarter. Profit more than doubled sequentially as operating margins improved to 20.6% and a one-time semaglutide-related provision eased. The company retains a net cash surplus of ₹2,500 crore.
Why the gap
The two results reflect different pressures. Kotak is expanding its loan book and benefiting from improving credit quality, and its main risk is margin compression. Dr. Reddy’s is dealing with one product, a drug whose US sales are fading as competition grows, and its fortunes depend on how fast newer products and other markets can fill the gap.
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