Dr Reddy's Laboratories share price rose in the early trade on May 21 after the company reported a 76 percent year-on-year (YoY) jump in the company's net profit for the quarter ended March 31, 2020.
For Q4 FY20, the company's net profit stood at Rs 764.2 crore against Rs 434.4 crore in the corresponding quarter of the previous financial year.
Among the geographies, Europe's segment saw a jump of 80 percent YoY in revenue, while North America and Emerging Markets rose 21 percent and 15 percent YoY, respectively. India segment rose 5 percent YoY.
CLSA | Rating: Outperform | Target: Raise to Rs 4,450 from Rs 4,250 per share
It was a strong finish to FY20 as the company managed to beat Q4 numbers across geographies. The inventory stocking propelled growth in the US & Russia, while lockdown impacted India growth.
It believes that the growth momentum in the branded generics market should remain strong.
The US growth should be boosted by 25 new launches and tweak EPS estimates for FY21-22 by 1 percent, said CLSA.
Jefferies | Rating: Underperformer | Target: Raised to Rs 3,000 from Rs 2,500 per share
The company has reported mixed numbers in Q4. Revenue was 4 percent ahead while the margin was 90 bps below.
The US sales were benefitted from stocking while India growth disappointed due to lockdown. The FY21 will see increased R&D and capex limiting margin improvement, said Jefferies.
Prabhudas Lilladher | Rating: Buy | Target: Rs 4,326
Over FY21-22E, the company will likely see change is business mix with high margin domestic formulation contributing more to the revenue. The company had already recognized the challenging environment in the US market and accordingly reduced capital allocation.
Prabhudas Lilladher expects normalized growth in India formulations however EU and EMs will be major growth drivers to refill the lower growth in US-Gx and Russia for 1H FY21E. It changed the earnings estimate marginally and continue to assign 24x PE on FY22E and arrive at a new target price of Rs 4,326 from earlier Rs 4,030.At 09:23 hrs, Dr Reddys Laboratories was quoting at Rs 3,928.95, up Rs 18.20, or 0.47 percent on the BSE.