Hold Dr Reddy's Laboratories target of Rs 3255: ICICI Direct

ICICI Direct's research report on Dr Reddy's Laboratories

Revenues grew 13.8% YoY to Rs 4397.1 crore, mainly due to strong growth in Europe, Russia, other CIS markets. Domestic revenues grew 13.3% YoY to Rs 763.6 crore. US revenues grew 7.9% YoY to Rs 1599.9 crore. EBITDA margins (excluding impairment charges) expanded 263.4 bps to 23.5% mainly due to lower R&D and employee expenses. EBITDA grew 28.2% YoY to Rs 1031.3 crore. Adjusted PAT grew 56.2% YoY to Rs 781.6 crore. Delta vis-à-vis EBITDA was mainly due to lower tax outgo and interest cost offset by lower other income.

Outlook

Overall, it is still a work in progress for the company with product/segment identification for growth and cost rationalisation drive likely to continue for the next few quarters. We arrive at our target price of Rs 3255 based on 18x FY22E EPS of ~Rs 180.9.