Sharekhan's research report on Dr. Reddy’s Laboratories
Dr. Reddy’s Laboratories (DRL) continued to register strong numbers in Q3FY2023 also, led by even stronger growth in the US and recovery in the other markets. US revenue growth was driven by new product launches, increase in volumes, and favorable forex movement; partly offset by price erosion. Consolidated revenues grew by 27.2% y-o-y to Rs. 6,789.8 crore; gross margins improved by 452 bps y-o-y to 70.5% and OPM improved by 589 bps y-o-y to 28.7%; PAT grew by a strong 75.4% y-o-y to Rs. 1,243.9 crore aided by strong growth in operating profits with improved new product launches and favorable products mix, despite increase in interest cost and taxes y-o-y.
The stock is currently trading at an attractive valuation of 14.5x/12.4x its FY2024E/25E. We maintain our Buy recommendation on the stock with unchanged PT of Rs. 5,460.
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