Neutral Dr Reddys Labs; target of Rs 1250: Motilal Oswal

Motilal Oswal recommended Neutral rating on Dr Reddys Labs with a target price of Rs 1250 in its research report dated December 12, 2025.

Broker Research

December 15, 2025 / 11:22 IST

Neutral

Motilal Oswal's research report on Dr Reddys Labs

We recently met with the management of Dr. Reddy’s Labs (DRRD) to understand the company’s business prospects in detail: While increased competition in g-Revlmid would weigh on DRRD’s near-term performance, the company is implementing efforts to improve growth prospects over the next 2-3 years. Product-wise, Semaglutide and Abatacept present promising opportunities from FY27 and FY28 onwards, respectively. In addition, execution is underway to drive growth, with the aim of achieving double-digit performance in the remaining businesses – India, EU, Emerging Markets, and the PSAI segment. The company is also implementing cost-rationalization measures to support better margins going forward. Further, there is scope to utilize cash reserves (INR28b at the end of 1HFY26) for inorganic opportunities in its focus markets.

Outlook

Excluding the Semaglutide/g-Revlimid and yet-to-be-accounted-for Abatacept opportunities, EV/EBITDA of the base business is 16x 12M forward EBITDA. We believe the current valuations adequately factor in the upside. We reiterate a Neutral stance (TP of INR1,250 on 19x 12M forward earnings).

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