Buy Dr. Reddy’s Laboratories; target of Rs 3350: Edelweiss

Edelweiss' research report on Dr. Reddy’s Laboratories

Dr. Reddy’s Laboratories (DRRD) is our top pick in the large-cap pharma space and is also part of the Braveheart Series. Key assets of the company are progressing well and here is the update– 1) gSuboxone – Awaiting decision of the appeals court, which is expected in next few months; 2) gNuvaring – Minor query, expected launch in H1CY2019 vs H2FY2019 earlier; 3) gCopaxone – will submit response on earlier queries by August 2018 approval is expected in H2CY2019; 4) DFN02 – PDUFA date in January 2019, preparing for launch; 5) Srikakulam – Responded to all queries and USFDA response is expected; 6) Duvvada – Invited USFDA to re-inspect the plant.

Outlook

There are multiple triggers in earnings in FY19, with full potential expected to be seen in FY20. Refer to our upgrade note. Maintain ‘BUY’ and TP of INR3,350.