Dr Reddys Laboratories a market performer: Karvy

Karvy Stock Broking has downgraded its rating on Dr Reddys Laboratories to market performer with a target price of Rs 715 in its July 23, 2008 research report. "Dr. Reddy's Laboratories Limited (DRL) revenues have grown by 25 % to Rs 15037 million. The key growth drivers have been PSAI(Pharmaceutical Services & Active Ingredients) which has grown by 27 % to Rs 4613 million. The company has regrouped API and CPS segments as PSAI while North America Global generics has grown by 62 %. The growth in North America has been aided by the acquisition of the Shreveport facility. Gross margins have been marginally lower at 50.3 % while profits before forex gain has lower by 22% to Rs 1200 million."

"The company has reiterated its revenue guidance of 25 % revenue growth in rupee terms. As a result of the amortization charges and increased tax rates we downgrade our EPS estimates for FY 2009 by 7.1 % to Rs 38.5 and by 10.2 % to Rs 44.8. We downgrade our price target by 10.5% to Rs 715 based on 16x FY 2010E. As a result of the downgrade in price target we reduce our rating on the stock to Market Performer," says Karvy's research report.

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