Buy Dr Reddys Laboratories; target of Rs 2995: ICICIdirect

ICICIdirect.com is bullish on Dr Reddys Laboratories and has recommended buy rating on the stock with a target price of Rs 2995, in its research report dated February 17, 2014.

February 17, 2014 / 12:57 IST

26 Aug, 2025 12:21

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ICICIdirect.com report on Dr Reddys Laboratories

"Despite significant volatility in the broader index, only a few stocks showed resilience and outperformed the broader markets. In the current phase where money outflow was clearly visible from defensives like pharma and FMCG, Dr Reddy's stood out from its peers. Most heavyweights from the pharma sector witnessed profit booking in excess of 10 percent in the last couple of months while Dr Reddy's moved above its consolidation range of Rs 2400-2550 and made all-time high levels near Rs 2700."

"Since September 2013, Dr Reddy's has not spent much time below its 50 DMA levels and witnessed a sharp reversal. The tendency shows continuous buying interest in the stock. Once again, the stock has bounced back from its 50 DMA levels placed at Rs 2560 and did not close below that level."

"Due to constant outperformance over its peers, Dr Reddy's witnessed accumulation of short positions in anticipation of extended profit booking. The open interest in the stock has increased almost 25 percent since the inception of the February series. Most pharma heavyweights saw profit booking after their quarterly results. However, profit booking in Dr Reddy's remained short lived and buying interest is clearly evident in the current up move of the stock. We believe a fresh round of upsides would be triggered by short covering in the recently formed short positions, which can move the stock towards Rs 3000."

"On the delivery front as well, no major cash based selling was observed in the profit booking leg seen from Rs 2700 to Rs 2520. At the same time, declines are countered by upsides backed by higher volumes. Thus, we believe declines in the stocks should be utilised for creating fresh long positions for higher targets of Rs 2995," says ICICIdirect.com research report.