Buy Dr Reddy's Laboratories; target of Rs 5215: ICICI Direct

ICICI Direct's research report on Dr Reddy's Laboratories

Dr Reddy’s (DRL) portfolio includes pharmaceutical generics, APIs, custom pharmaceutical services, biosimilar and complex formulations. Revenue breakup Q2FY23: US (44%), India (19%), Russia and CIS (13%), Europe (7%), RoW (7%), PSAI (10%) • It has 13 formulation facilities, nine API manufacturing facilities, one biologics facility and several R&D centres across the globe.

Outlook

We maintain BUY due to 1) ramp up across geographies on back of new launches, 2) strong FCF generation to be driven by gRevlimid and other niche launches and 3) calibrated cost approach based on better product mix. We value Dr Reddy’s at Rs 5215 i.e. 25x FY24E EPS of Rs 202.4+ NPV of Rs 154 for gRevlimid.

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Dr Reddy's Laboratories - 31-10-2022 - icici