Shares of Dr Reddy's Laboratories rallied over 3 percent to Rs 1,288 on July 24 after its consolidated net profit increased nearly 2 percent year-on-year to Rs 1,418 crore during the June quarter. Revenue increased 11.4 percent to Rs 8,545 crore for the period under review as against Rs 7,672.7 crore in the year-ago period, Dr Reddy’s Laboratories said in a regulatory filing.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) grew 5 percent to Rs 2,278 crore in the first quarter of June 2025. The margin was reported at 26.7 percent against 28.2 percent year-on-year (YoY).
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The gains come despite brokerages dishing out bearish calls on the stock. CLSA has maintained an Underperform rating on Dr Reddy’s with a target price of Rs 1,120 per share. This implies a downside potential of 10.2 percent from the last close. It expects the US base business to remain flat or grow at low single digits year-on-year, while other markets are likely to see steady growth. Sales of gRevlimid are expected to taper off from Q3FY26, though this may be partially offset by the launch of semaglutide in markets like Canada and India.
Jefferies has also retained an Underperform call, with a lower target price of Rs 1,100 per share. The firm flagged a miss in Q1 results, primarily due to weaker US sales, impacted by a sequential decline in gRevlimid and the base business. Performance in other markets was in line, but SG&A costs and R&D expenses remained high. Jefferies highlighted the approvals for gOzempic in Canada and a US filing for Abatacept as key upcoming events. It has factored in a timely launch and meaningful contribution from both drugs.
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Morgan Stanley has assigned an Equal-Weight rating with a target price of Rs 1,298 per share. The company reported an 11 percent year-on-year rise in Q1 revenue, though gross margins declined due to higher generic price erosion and lower operating leverage. While EBITDA was in line with expectations, net profit rose by 2 percent year-on-year.
Revlimid (Lenalidomide), which drove windfall profits over the last two years, is now firmly in decline. Management confirmed that Q2 would be the last quarter with meaningful contribution from the product, with revenues expected to fall sharply in the second half as more competition enters the market.
The focus has now shifted to Semaglutide, the GLP-1 agonist being pursued as a generic version of Ozempic/Wegovy. Dr Reddy’s reaffirmed plans to launch the product in Canada in January 2026, once exclusivity expires. Rollouts in 87 markets are expected through FY26–27. While the company has secured pen capacity of 10–12 million units via partners, its own Vizag facility will only come online in FY28 — a delay that could limit early upside.
Dr Reddy's Labs' stock price is down 10 percent since the beginning of the year.
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