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Feb 23, 2013, 05.43 PM IST | Source: Moneycontrol.com

Angel Broking neutral on Dr Reddys Laboratories

Angel Broking has maintained a neutral rating on Dr Reddys Laboratories (DRL) in its February 21, 2013 research report. The research firm expects net sales to report a 9.8% CAGR to Rs 11,662cr and adjusted EPS to record a 2.3% CAGR to Rs 92.9 over FY2012-14E.

Angel Broking has maintained a neutral rating on Dr Reddys Laboratories (DRL) in its February 21, 2013 research report. The research firm expects net sales to report a 9.8% CAGR to Rs 11,662cr and adjusted EPS to record a 2.3% CAGR to Rs 92.9 over FY2012-14E.

"DRL reported more or less just-in 3QFY2013 top-line and bottom-line performance. The company's net sales increased by 3.5% yoy (23% adjusted for the base effect). The growth came in on back of 24% yoy (adjusted) in the US and Emerging Markets. On the EBIT margins came in at 15.0% V/s expected 15.8%. Consequently the net profit came in at Rs 363cr, a dip of 29.1%, mostly in line with expectations of Rs 339cr.

DRL reported net sales of Rs 2,865cr for 3QFY2013, registering 23.0% yoy growth, which was a tad lower than our estimate of Rs 2,700cr. The U.S. and Emerging markets grew by 24% yoy (adjusted) were the key growth drivers for the company. The domestic market reported a strong growth of 12.0% yoy. On the positive side the PSAI segment posted a robust growth of 28.0% yoy during the quarter. The company's EBIT margin came in at 15.0% V/s expected 15.8% and contracting by 11.7%, leading to a dip of 29.1% to Rs 363cr during the quarter.

DRL has reinforced its earlier revenue guidance of US$2.7bn by FY2013E with RoCE of 25%. We expect net sales to report a 9.8% CAGR to Rs 11,662cr and adjusted EPS to record a 2.3% CAGR to Rs 92.9 over FY2012-14E. We maintain our neutral on the stock," says Angel Broking research report.

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