Moneycontrol Be a Pro
Get App
Last Updated : Jul 31, 2019 11:22 AM IST | Source:

Accumulate Dr. Reddy's Laboratories; target of Rs 2997: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Dr. Reddy's Laboratories with a target price of Rs 2997 in its research report dated July 29, 2019.

Broker Research @moneycontrolcom
  • bselive
  • nselive
Todays L/H

Prabhudas Lilladher's research report on Dr. Reddy's Laboratories

DRRD sales were in line with our estimates while adj. EBITDA and adj. PAT missed estimates due to significantly lower PSAI sales, one-off inventory adjustment and price erosion in key generics. Management however maintained tighter control on overhead costs (employee and SGA) with its ongoing program of rationalized assets, products and global presence. Employee costs increased by 2% while SGA and R&D costs decreased by 7% and 1% QoQ, respectively. Its adoption of new strategy with cost-benefit analysis of each operational activity helps to limit the reduction of adj. EBITDA margin only by 110bps QoQ to 19.2%, despite one-off inventory adjustment, adverse forex (USD/INR) and 33% QoQ lower PSAI sales in Q1FY19. Adjusted with one-off income of Rs3,457m, PAT missed our estimates by 28%, mainly due to ensuing effect of lower headline margins.


We assign PE 18x on FY21E earnings and derive new TP of Rs2,997, improved by 17% over our previous TP of Rs2,558. We upgrade our recommendation to 'Accumulate.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Jul 31, 2019 11:22 am
Follow us on
Available On