Buy Dr Reddys Labs; target of Rs 2425: Motilal Oswal

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26 Aug, 2025 12:21

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Motilal Oswal is bullish on Dr Reddys Labs and has recommended buy rating on the stock with a target of Rs 2425 in its February 12, 2013 research report.
 
“Dr. Reddy's (DRRD) is a vertically integrated pharmaceutical major with presence across value chain through its core businesses of Global Generics, Pharmaceutical Services & Active Ingredients (PSAI), and Proprietary Products. The company is currently developing biogenerics and NCEs. Key focus markets include India, US, Europe and Russia.”
 
“Dr. Reddy's derives more than 75percent of its revenues from exports and less than 20percent of its raw material costs constitute of imports. As per its hedging policy, Dr. Reddy's covers receivables for the upcoming 18 months and classifies these hedges as cash-flow hedges. Its outstanding cash flow hedge position, as of September 2012, stood at ~USD600m. Company has not been able to realize the full benefit of Rupee depreciation as some of its cash flow hedges were booked at appreciated INR/USD rate. We believe that Dr.Reddy's will continue to see the benefit of INR depreciation in its top line as new hedges get locked at current INR/ USD rates. The company continues to focus on its five key markets - US, India, Russia, Germany and UK. The US market will be a key growth driver in FY14 led by the commercialization of its pipeline of 80 ANDAs (pending approval) and the contribution from FTF/ low-competition opportunities. At least one limited competition product approval is due in Q4, which should add to revenues in FY14.”
 
“We expect core EPS CAGR of 17percent for FY13-15. DRRD stock trades at 18.5x FY14E and 15.8x FY15E core earnings. Buy with a target price of INR2,425,” says Motilal Oswal research report.

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