Karvy Stock Broking has upgraded its rating on Dr Reddys Laboratories from market performer to buy with a revised price target of Rs 850 in its May 22, 2008 research report. "Dr. Reddy's Laboratories Limited (DRL) revenues have declined by 15 % to Rs 13252 million. The lower revenues are on account of high base of Zofran in the corresponding quarter of the previous year. The key growth drivers have been domestic formulations which has increased by 24 % to Rs 1993 million while International formulations has grown by 19 % to Rs 1528 million. Gross margins for the quarter has been lower at 53 % as against 63% in the corresponding quarter of the previous year. Profits for the quarter are at Rs 1028 million after providing write down of intangible of Rs 128 million on account of product related intangibles while impairment of goodwill has been on account of Rs 90 million relating to the subsidiary in Atlanta."

"The company has given a guidance of 25 % revenue growth in rupee terms. We have factored the same which would be powered by greater traction in domestic and international formulations, US generics, CPS and API business. We upgrade our revenues from Rs 57 billion to Rs 62 billion for FY 2008 and from Rs 64 billion to Rs 73 billion for FY 2009. We upgrade our EPS by 25.5 % to Rs 41.2 for FY 2008 and by 26 % to Rs 49.3 for FY 2009. We upgrade our price target by 20 % to Rs 850 based on 17.2x FY 2010E  We upgrade our rating from Market Performer to BUY," says Karvy's research report.

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