Buy Dr. Reddy's Laboratories; target of Rs 4900: Prabhudas Lilladher

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

Dr. Reddy’s (DRRD) Q3FY23 profitability was sharply ahead of our estimate aided by higher gRevlimid sales. Even base US business grew QoQ. We expect exRevlimid margins to improve with easing of commodity and revenue scaling up with new launches in US. At CMP, DRRD is trading at attractive valuations of 18x P/E on FY25E adjusted for gRevlimid.

Outlook

We maintain our estimates and ‘Buy’ rating with TP of Rs4,900/share. Delay in key ANDA approvals and prolonged inflationary environment of raw material prices are key risks to our call.

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