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Buy Dr Reddy’s Laboratories: target of Rs 5900: Sharekhan

Sharekhan is bullish on Dr Reddy’s Laboratories has recommended buy rating on the stock with a target price of Rs 5900 in its research report dated September 06, 2021.

September 07, 2021 / 01:03 PM IST
HDFC Securities research report's outlook and valuations:  500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" title="HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" width="100%" height="auto" >

HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

 
 
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Sharekhan's research report on Dr Reddy’s Laboratories


Dr Reddy’s Laboratories Ltd (DRL) has entered in to a definitive agreement to sell its rights pertaining to an investigational cancer drug, resulting in cash in-flows of $40 mn, upon completion of deal. This would be followed by 2 milestone payments of $40mn and $70 mn. Focus on geographic expansion and OTC business to drive the India business growth. Opportunities from Covid products including vaccines to also add to the growth. A strong pipeline of new product launches in the US business to enable DRL reduce the impact of the price erosion and support growth.



Outlook


At the CMP the stock trades at 30.4x / 23.1x its FY22E / FY23E EPS. Basis the positives we re-iterate Buy recommendation on the stock with an unchanged PT of Rs 5900.


For all recommendations report, click here

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first published: Sep 7, 2021 01:03 pm

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