Buy Dr Reddys Labs: Motilal Oswal

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Motilal Oswal has maintained its buy rating on Dr Reddys Laboratories in its August 25, 2008 research report. "The recent acquisition of the BASF facility in the US is likely to help DRL participate in US government tenders and will also facilitate packaging for its OTC business. The impact of this acquisition will be visible in FY10. Based on the lower than expected operational performance and to factor-in the equity dilution due to warrants, we have reduced our EPS estimates by 9% and 6.7% for FY09E and FY10E respectively. Based on our revised estimates, we expect DRL to record EPS of Rs 36.2 and Rs 46.9 for FY09E and FY10E respectively. DRL is currently valued at 16.2x FY09E and 12.5x FY10E earnings. Maintain Buy," says Motilal Oswal's research report.

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