Dr Reddy's Laboratories (Dr Reddy's Laboratories) Beneish M-Score : -2.34 (As of Apr. 25, 2024)

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What is Dr Reddy's Laboratories Beneish M-Score?

The zones of discrimination for M-Score is as such:

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Good Sign:

Beneish M-Score -2.34 no higher than -1.78, which implies that the company is unlikely to be a manipulator.

The historical rank and industry rank for Dr Reddy's Laboratories's Beneish M-Score or its related term are showing as below:

RDY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.12 Med: -2.46 Max: -2.13
Current: -2.34

During the past 13 years, the highest Beneish M-Score of Dr Reddy's Laboratories was -2.13. The lowest was -3.12. And the median was -2.46.

Dr Reddy's Laboratories Beneish M-Score Historical Data

The historical data trend for Dr Reddy's Laboratories's Beneish M-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

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Dr Reddy's Laboratories Beneish M-Score Chart

Dr Reddy's Laboratories Annual Data

Trend

Mar14

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Beneish M-Score

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-2.77

-2.20

-2.68

-2.31

-2.63

Dr Reddy's Laboratories Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
Beneish M-Score	Get a 7-Day Free Trial															-2.45	-2.63	-2.68	-2.69	-2.34

Competitive Comparison of Dr Reddy's Laboratories's Beneish M-Score

For the Drug Manufacturers - Specialty & Generic subindustry, Dr Reddy's Laboratories's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

Dr Reddy's Laboratories's Beneish M-Score Distribution in the Drug Manufacturers Industry

For the Drug Manufacturers industry and Healthcare sector, Dr Reddy's Laboratories's Beneish M-Score distribution charts can be found below:

* The bar in red indicates where Dr Reddy's Laboratories's Beneish M-Score falls into.

Dr Reddy's Laboratories Beneish M-Score Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Dr Reddy's Laboratories for today is based on a combination of the following eight different indices:

-4.84

0.92 * DSRI

0.528 * GMI

0.404 * AQI

0.892 * SGI

0.115 * DEPI

-4.84

0.92 * 1.1212

0.528 * 0.9535

0.404 * 1.0253

0.892 * 1.0976

0.115 * 1.0027

0.172 * SGAI

4.679 * TATA

0.327 * LVGI

0.172 * 0.9932

4.679 * -0.013091

0.327 * 0.964

-2.34

This Year (Dec23) TTM:

Last Year (Dec22) TTM:

Total Receivables was $1,154 Mil.
Revenue was 866.601 + 828.241 + 819.505 + 765.415 = $3,280 Mil.
Gross Profit was 506.919 + 485.952 + 481.033 + 437.566 = $1,911 Mil.
Total Current Assets was $2,864 Mil.
Total Assets was $4,478 Mil.
Property, Plant and Equipment(Net PPE) was $874 Mil.
Depreciation, Depletion and Amortization(DDA) was $173 Mil.
Selling, General, & Admin. Expense(SGA) was $903 Mil.
Total Current Liabilities was $1,124 Mil.
Long-Term Debt & Capital Lease Obligation was $74 Mil.
Net Income was 165.626 + 178.163 + 170.568 + 116.597 = $631 Mil.
Non Operating Income was 13.957 + 15.445 + 10.532 + 0.924 = $41 Mil.
Cash Flow from Operations was 56.898 + 215.794 + 136.819 + 239.21 = $649 Mil.

Total Receivables was $938 Mil.
Revenue was 820.867 + 785.72 + 667.87 + 713.588 = $2,988 Mil.
Gross Profit was 486.13 + 464.115 + 333.026 + 377.256 = $1,661 Mil.
Total Current Assets was $2,358 Mil.
Total Assets was $3,750 Mil.
Property, Plant and Equipment(Net PPE) was $788 Mil.
Depreciation, Depletion and Amortization(DDA) was $156 Mil.
Selling, General, & Admin. Expense(SGA) was $828 Mil.
Total Current Liabilities was $1,023 Mil.
Long-Term Debt & Capital Lease Obligation was $18 Mil.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total Receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI	=	(Receivables_t / Revenue_t)	/	(Receivables_t-1 / Revenue_t-1)
	=	(1154.035 / 3279.762)	/	(937.728 / 2988.045)
	=	0.351865	/	0.313827
	=	1.1212

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI	=	GrossMargin_t-1	/	GrossMargin_t
	=	(GrossProfit_t-1 / Revenue_t-1)	/	(GrossProfit_t / Revenue_t)
	=	(1660.527 / 2988.045)	/	(1911.47 / 3279.762)
	=	0.555724	/	0.582808
	=	0.9535

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than Property, Plant and Equipment to Total Assets.

AQI	=	(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)	/	(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
	=	(1 - (2864.451 + 874.372) / 4478.367)	/	(1 - (2358.167 + 788.081) / 3750.282)
	=	0.165137	/	0.161064
	=	1.0253

4. SGI = Sales Growth Index

Ratio of Revenue in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI	=	Sales_t	/	Sales_t-1
	=	Revenue_t	/	Revenue_t-1
	=	3279.762	/	2988.045
	=	1.0976

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI	=	(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))	/	(Depreciation_t / (Depreciaton_t + PPE_t))
	=	(156.493 / (156.493 + 788.081))	/	(173.064 / (173.064 + 874.372))
	=	0.165676	/	0.165226
	=	1.0027

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI	=	(SGA_t / Sales_t)	/	(SGA_t-1 /Sales_t-1)
	=	(903.213 / 3279.762)	/	(828.489 / 2988.045)
	=	0.27539	/	0.277268
	=	0.9932

7. LVGI = Leverage Index

The ratio of total debt to Total Assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase in leverage

LVGI	=	((LTD_t + CurrentLiabilities_t) / TotalAssets_t)	/	((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
	=	((73.894 + 1124.27) / 4478.367)	/	((17.666 + 1023.149) / 3750.282)
	=	0.267545	/	0.27753
	=	0.964

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA	=	(IncomefromContinuingOperations_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(NetIncome_t - NonOperatingIncome_t	-	CashFlowsfromOperations_t)	/	TotalAssets_t
	=	(630.954 - 40.858	-	648.721)	/	4478.367
	=	-0.013091

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Dr Reddy's Laboratories has a M-score of -2.34 suggests that the company is unlikely to be a manipulator.

Dr Reddy's Laboratories Beneish M-Score Related Terms

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Dr Reddy's Laboratories (Dr Reddy's Laboratories) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Dr Reddy's Laboratories Ltd (NYSE:RDY) » Definitions » Beneish M-Score

Traded in Other Exchanges

DRREDDY:India 500124:India RDDA:Germany RDDA:Germany R1DY34:Brazil

Address

8-2-337, Road No. 3, Banjara Hills, Hyderabad, TG, IND, 500 034

Website

https://www.drreddys.com

Dr. Reddy's is one of the largest generic drug manufacturers in the world. It has a significant presence in North America, a region that makes up roughly half of its generics sales, and it services India (22% of its generics sales), Russia (12%), and certain European and Latin American countries. Beyond simple generics, Dr. Reddy's also has a solid portfolio of injectables which make up 25% of its North America sales. In branded generic markets like India, Dr. Reddy's has established a compelling presence with its strong brand name and earned a top five spot in key therapeutic areas including oncology and gastroenterology. Dr. Reddy's also has an active pharmaceutical ingredient business that manufactures over 150 APIs and sells in over 75 countries.