Accumulate Dr. Reddy’s laboratories; target of Rs 5418 KR Choksey

KR Choksey recommended accumulate rating on Dr. Reddy’s laboratories with a target price of Rs 5418 in its research report dated October 30, 2020.

Broker Research

November 04, 2020 / 20:53 IST

26 Aug, 2025 12:21

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KR Choksey's research report on Dr. Reddy’s laboratories

Dr. Reddy’s laboratories reported Revenue growth of 2.0% YoY (up 10.9% QoQ) to INR 49,109 mn in Q2FY21. EBITDA declined 13.1% YoY (up 10.1% QoQ) to INR 12,342 mn while EBITDA margin contracted by 437 bps YoY to 25.1% in Q2FY21 (from 29.5% in Q2FY20). Company reported PAT of INR 7,718 mn, a decline of 30.3% YoY (up 29.8% QoQ). Net Profit Margin contracted 728bps YoY (+228 bps QoQ). R&D expenses were 8.9% of revenue (INR 4.4 bn) in Q2FY21 as against 7.6% (INR 4.5 bn) in Q2FY20. Capex for the quarter was INR 2.5 bn.

Outlook

We continue to apply a P/E multiple of 27.5x on FY22E EPS of INR 197/share and maintain our target price of INR 5,418/ share, an upside potential of 10% over CMP. Accordingly, we reiterate an “ACCUMULATE” rating on the shares of Dr. Reddy’s Laboratories.

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