Dr Reddy’s Q2 review: Brokerages term results to be in line with estimates; Citi rises target to Rs 2,680

At an operating level, the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) rose to Rs 864.6 crore, a rise of 25.5 percent from Rs 688.8 crore reported during the previous year.

The operating margin came in at 22.8 percent against 19.4 percent year on year.

Here’s how global brokerages reacted to Dr Reddy’s Q2 show.

Brokerage: Macquarie | Rating: Neutral | Target: Rs 2,500

The global research firm said that the results were marginally better, driven by a strong Russia, China sales. It likes the company’s focus on cost efficiencies and rationalization of non-core assets. Reducing complex arbitrage could play spoilsport, it added.

Brokerage: Nomura | Rating: Buy | Target: Rs 2,704

Nomura said that the company’s Q2 was in line with estimates and there was strength visible beyond US generics. Key near-term events likely to impact earnings, it added.

Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 2,729

Morgan Stanley said that Q2 was a beat as emerging markets made up for domestic markets’ stagnation. Base business is showing growth momentum, it added.

Brokerage: Citi | Rating: Neutral | Target: Raised to Rs 2,680

Citi termed the Q2 earnings were a mixed bag. It raised FY19 earnings per share (EPS) target by 10 percent, but lowered FY20-21 EPS estimates by 4-5 percent. It is factoring in slightly higher erosion in US generics. Stability in US pricing & cost control initiatives should provide a floor to base earnings, it added.