Sharekhan's research report on Dr Reddy’s Laboratories
We reiterate our Buy rating on Dr. Reddy’s after interacting with the management of the company in our recent visit to Hyderabad where they are positive on growth momentum led by Horizon 1 and Horizon 2 strategy. North America to clock a 7% CAGR from FY24-26E driven by 25 new product launches in the generics segment (either FTFs or in the 1st wave), gRevlimid and biosimilar launches. India sales to grow in double digits led by internal restructuring of MRs leading to higher productivity, expanding into digital therapeutic and OTC/nutraceutical products.
Outlook
Stock trades at attractive valuation of 18x and 16x its FY2025E and FY2026E estimates. The company is focusing on shifting its focus to pure generics company to Biosimilars, digital therapeutics, nutraceuticals, CDMO segment hence we maintain a Buy with a PT of Rs. 6,537.
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