Neutral Dr Reddy’s Labs; target of Rs 6,070: Motilal Oswal

Motilal Oswal recommended accumulate rating on Dr Reddy’s Labs with a target price of Rs 6,070 in its research report dated May 07, 2024.

Broker Research

May 09, 2024 / 11:34 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Dr Reddy’s Labs

Dr. Reddy’s Lab (DRRD) delivered 4QFY24 revenue in line with our estimate. However, EBITDA was lower than expected due to higher SGA expenses and R&D spending. In addition to US generics/branded generics segments, DRRD is enhancing its offering through JVs/partnerships/acquisitions in nutraceuticals, vaccine, women’s health and dietary supplement space.

Outlook

We maintain our earnings estimates for FY25/FY26. We value DRRD on SOTP basis (22x 12M forward earnings for base business and INR 90 per share for g-Revlimid) to arrive at a TP of INR 6,070. After delivering 30% YoY earnings growth in FY24, we expect earnings growth to moderate to a 3.5% CAGR over FY24-26, partly due to a gradual build-up of market share of g-Revlimid. The investment in JV with Nestle and in biosimilar segment should drive commercial benefits after FY26. We believe that the valuation adequately factors in the upside in earnings. Maintain Neutral rating on the stock.

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