Accumulate Dr Reddys Labs; target of Rs 4793:KRChoksey

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26 Aug, 2025 12:21

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KRChoksey research report on Dr Reddys LaboratoriesCumulatively 76 ANDAs are pending out of which 50 are Para IVs & 18 FTFs. Company has strong focus on niche launches & building its pipeline in injectables, biosimilars & derma space. Also, strong domestic business will help the company to drive growth in future. Any Warning letter or import alert on Srikakulam API plant is a key risk to our estimates. At CMP of INR 4214 DRL is trading at 22.6xFY17E & 20.2xFY18E EPS. We introduce FY18 estimates & maintain ‘ACCUMULATE’ rating with the revised target price of Rs. 4,793 at 23xFY18E.DRL’s Q2FY16 result was above our estimates on back of higher than expected operating performance. Revenues showed growth of 11% YoY to INR 39890mn. North American business posted growth of 26% YoY in dollar terms on account of sustained performance of injectables franchise, market share gains in key molecules and traction in Sirolimus, Valganciclovir, Memantine & Habitrol. Indian business has shown growth of 14% YoY. Russia showed grew by 11% in constant currency terms. EBIDTA grew by 40% YoY to INR 11404mn & EBITDA margin stood at 28.6% expanded by 590bps on account of increase in gross margins due to better business mix & lower SGA expenses. R&D expenses stood at 11.4% in line with management guidance due to scale up in development activities of complex generics. The company has outstanding cashflow hedges of around USD 300mn at an average rate of Rs. 61-64.2/USD and balance sheet hedges of around USD 135mn. In Russia, company has outstanding cashflow hedges of 960mn rouble at an avg rate of INR1-1.6/rouble. Reported PAT stood at INR 7219 mn up by 26% YoY on account of higher operating performance. EPS for the quarter stood at INR 42.3.For all recommendations, click here 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.

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