Dr Reddy's Labs will see strong growth in FY11: Udayan

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Dr Reddy's Labs will see strong growth in FY11: Udayan

Dr Reddy's Laboratories has received the US Food and Drug Administration's approval to launch the generic version of Sanofi-Aventis' allergy drug Allegra. Udayan Mukherjee says, "I think some of the estimates might go up for Dr Reddy. Fiscal year '11 is going to be a block buster kind of year for Reddy because the growth over '10 will be huge."

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Dr Reddy's Laboratories has received the US Food and Drug Administration's approval to launch the generic version of Sanofi-Aventis' allergy drug Allegra.

Commenting on this development, Udayan Mukherjee, Managing Editor, CNBC-TV18 says, it is a good development, something which the investors in Dr Reddy's were looking out for.

"I think some of the estimates might go up for Dr Reddy's. Fiscal year '11 is going to be a block buster kind of year for Dr Reddy's because the growth over '10 will be huge."

Here is a verbatim transcript of Udayan Mukherjee's comments on CNBC-TV18. Also watch the accompanying video.

It is a good development, something which the investors in Dr Reddy's were looking out for. Allegra D24 and D12, there is a quite a bit of upside on both those products going forward into fiscal year' 11. The good thing is that it is not a distant upside like launching in 2013 or anything; it is going to be a 2011 launch. So I think some of the estimates might go up for Dr Reddy.

In any case, fiscal year '11 is going to be a block buster kind of year for Dr Reddy's because the growth over '10 will be huge, so it a point of debate whether they will end up with Rs 50 earnings or Rs 60 earnings for next year. If it is closer to Rs 60 then the stock is trading at about 20 times fiscal year'11. That is not terribly cheap, but it is a good company and after a long time it is getting the rub of the green its own way. So for longer term investors you got to take a valuation call because the markets frankly priced in some of these Allegra kind of news. But it has been a big outperforming stock, so clearly investors have seen this coming.