Dr Reddy’s stock falls 1% today after Q2 profit misses estimates; brokerages split -- should you buy or sell?

Dr. Reddy’s Laboratories

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26 Aug, 2025 12:21

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Dr Reddy’s Laboratories’ stock fell as much as 1 percent on Monday, October 27, after the drugmaker reported July-September quarter earnings that came in below expectations due to weak performance in North America. The stock was trading at Rs 1,270 on NSE in the opening session, against the previous close of Rs 1,283.6.

Pharmaceutical major Dr Reddy’s Labs’ consolidated net profit rose 7 percent year-on-year to Rs 1,347.1 crore in Q2 FY26, short of the Rs 1,450 crore projected by brokerages. Revenue from operations, however, grew nearly 10 percent to Rs 8,828 crore, slightly above estimates.

Growth during the quarter was driven by a strong showing in branded markets and steady contributions from the nicotine replacement therapy (NRT) portfolio. India revenue rose 13 percent year-on-year, while Europe surged 138 percent. North America remained the weak link, with sales down 13 percent at Rs 3,241 crore, hurt by pricing pressure and lower Lenalidomide volumes.

Dr Reddy’s Labs stock call: Buy or Sell?

• Nuvama has a Buy call on Dr Reddy’s Laboratories stock with a target price of Rs 1,475 per share. It said that Q2 revenue was in line with expectations but adjusted profit beat consensus estimates. Margins declined due to price erosion in Revlimid and competition in key products. However, excluding Lenalidomide (Revlimid generic), EBITDA margin stood at around 19-20 percent. The brokerage expects Q3 to be a weak-margin quarter and said focus will now shift to the outcome of Dr Reddy’s Semaglutide filing in Canada.
• Macquarie shared a Neutral rating with a Rs 1,190 target, citing an EBITDA miss on in-line revenue. The brokerage warned of continued regulatory risks around the company’s Semaglutide (Ozempic) filing, where a complete response letter (CRL) from Health Canada cannot be ruled out.
• Morgan Stanley issued an Equal-weight call with a Rs 1,389 target, saying strong growth outside the US -- led by India, Europe, and emerging markets -- was offset by lower US revenue and margin pressure. It said that GLP-1 drugs and biosimilars are the key drivers to watch.

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