Hold Dr. Reddy's Laboratories; target of Rs 2523: KRChoksey

KRChoksey's research report on Dr. Reddy's Laboratories
Dr Reddy’s Labs reported Q1FY18 revenue of INR 33,332 mn which grew 1.98% Y-o-Y but degrew 7.13% Q-o-Q due to price erosion and channel consolidation in the US along with destocking of inventories due to GST in India. However, the company has witnessed a growing trend in the emerging market and Europe due to volume uptake and new product launches..

Outlook

At CMP of INR 2,478 the stock is trading at EPS of INR 77.9 in FY17 and we project EPS of INR 78.8 in FY19E . We recommend “HOLD” rating on the stock and value the stock at 32x, its FY19E EPS and arrive at a target price of INR 2,523 indicating 1.8% upside from CMP.

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