Hold Dr Reddys Laboratories; target of Rs 1329: KR Choksey

KR Choksey's research report on Dr Reddys Laboratories

Dr. Reddy beat our revenue estimates (+3.7%) due to strong double-digit across geographies. EBITDA was largely in-line with our estimate (+2.4%). However, Adj. PAT missed our estimate due to higher-than-expected finance cost and tax expenses. We largely maintain our FY26E estimates at INR 74.2 anticipating momentum in new launches, particularly in India and North America, where we expect the company to introduce several high-value, limited-competition products over FY26E, a positive outlook remains in Russia which will lead to market share gains and the launch of rituximab biosimilar in Europe by Feb-2025E.

Outlook

We largely maintain a PE multiple of 17.9x (previously: 18.0x) to FY26E EPS and arrive at a target price of INR 1,329/share (previously: INR 1,350). We upgrade our rating to “HOLD” from “REDUCE”, which will have an upside potential of 4.5%.