Dr Reddy’s stock jumps over 4% today as brokerages turn bullish after Q3 results beat estimates

Dr Reddy's Laboratories Ltd

• Dr Reddy's shares rose over 4 percent after Q3 results beat expectations
• India and emerging markets drove growth, offsetting US business weakness
• Brokerages turned positive, citing strong India sales and new product launches

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Shares of Dr Reddy’s Laboratories surged over 4 percent in early trade on Thursday after the pharmaceutical company delivered a better-than-expected set of Q3 FY26 results, prompting brokerages to turn more constructive on the stock. The stock outlook turned positive despite a year-on-year decline in profit and continued pressure in the US business.

At about 9:20 am, Dr Reddy's shares were trading at Rs 1,208 on NSE, up 4.4 percent from the previous close. Yesterday, ahead of the results, the stock had lost just under 1 percent.

Dr Reddy’s reported a 14.4 percent year-on-year fall in consolidated net profit to Rs 1,209.8 crore for the December quarter, smaller than Street expectations of about Rs 1,070 crore. Revenue from operations rose 4.4 percent YoY to Rs 8,726.8 crore, aided by strong growth in India and emerging markets, even as the North America business weighed on overall performance. EBITDA declined 10.8 percent YoY to Rs 2,049.3 crore, while gross margins moderated to 53.6 percent from 58.7 percent a year ago.

Dr Reddy's Laboratories stock call: Brokerages upbeat

Brokerages said the earnings beat was driven largely by the domestic and emerging markets portfolio, which helped offset weakness in the US. India revenues climbed 19 percent YoY, supported by price increases and the contribution from the Stugeron brand acquired from Johnson & Johnson, while North America revenues declined 12 percent amid a sharp slowdown in Lenalidomide sales.

HSBC maintained a buy call on the stock with a target price of Rs 1,435, citing stronger-than-expected sales growth in India and Russia, along with favourable foreign exchange benefits. The brokerage said investor focus now hinges on regulatory approvals for generic semaglutide in Canada and the abatacept biosimilar (IV formulation) in the US, flagging timely approvals as key catalysts for the stock.

CLSA upgraded Dr Reddy’s to hold from sell and raised its target price to Rs 1,210, saying the company delivered an earnings beat in Q3. The brokerage highlighted strong growth across India and emerging markets, partly offset by the decline in the US due to lower Revlimid sales. CLSA expects single-digit growth in the US excluding Revlimid and double-digit growth across other geographies, adding that semaglutide has received India approval and is targeted for launch in March, which could support domestic growth momentum.

Near-term concerns around Lenalidomide persist, but brokerages broadly believe that sustained growth in India and emerging markets could help stabilise earnings and support the stock over the medium term.

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