Emkay Global Financial Services has recommended hold rating on Dr Reddys Labs with a target of Rs 1700, in its May 11, 2012 research report.
- Q4FY12 Results, in-line- a) Revenues at Rs2.65bn (up 32%YoY), b) EBITDA at Rs6.6bn (up 129% YoY) and c) APAT at Rs4.2bn (up 38% YoY)
- India business grew by 17% led by 23 new launches in FY12. US business grew 48% to USD175mn led by launch of Geodon & Seroquel generics
- Going forward – There are 10-15 products including para-IV’s lined-up for launch in FY13 in US which are critical for the company to achieve USD2.7bn revenue target
- Recent negative surprise in Zyprexa, Avandia, Boniva and Clarinex raises concerns about successful monetization of other key products. Maintain Hold with price target of Rs1700
"48% growth in US (contr. 33%) led by generic launches such as Geodon & Seroquel. Zyprexa contribution at just USD2mn came as a negative surprise (we had est. USD45mn). Sale for Geodon and Seroquel is approx. USD33million § 17% growth in India (contr. 15%) formulations led by volume increase in key brands and oncology portfolio § 32% growth in Russia (contr. 13%) led by strong traction in OTC portfolio § 35% growth in PSAI segment (contr. 28%) led by new customer orders.”
"We expect Dr. Reddy to report 15% base revenue growth in FY13E and 13% growth in FY14E. We expect base EBIDTA margins to move from 19.3% in FY12 to 19.5% in FY13 and FY14. Base earnings will grow by 25% CAGR over FY12-14E. Maintain Hold with a target price of Rs1750. At CMP, the stock is trading at 18x FY13E and 16x FY14E earnings,” says Emkay Global Financial Services research report. FIIs holding more than 30% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. To read the full report click on the attachment
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