Neutral Dr Reddys Laboratories; target of Rs 1390: Motilal Oswal

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Motilal Oswal's research report on Dr Reddys Laboratories

Dr Reddy’s Lab (DRRD) delivered in-line 2QFY25 performance. DRRD exhibited robust YoY growth in North America (NA), Russia, and ROW markets and a healthy scale-up in the pharmaceutical services and active ingredients segment. This was offset by moderate YoY growth in the Europe/CIS business. Higher volume growth and new launches have been the key factors driving superior performance in NA, Russia, and ROW markets. Ex-Sanofi portfolio, the Indian business also delivered healthy YoY growth of 9% for the quarter. We largely maintain our earnings estimate for FY25/FY26/FY27. We value DRRD on an SOTP basis (22x base business earnings and add NPV of INR60 from g-Revlimid) to arrive at a TP of INR1,390.

Outlook

We largely maintain our earnings estimate for FY25/FY26/FY27. We value DRRD on an SOTP basis (22x base business earnings and add NPV of INR60 from g-Revlimid) to arrive at a TP of INR1,390.

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