Reduce Dr. Reddy's Laboratories; target of Rs 5150: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Dr. Reddy's Laboratories

We increase our FY24/25E EPS estimates by 25%/14%, as we factor in higher gRevlimid sales. Dr. Reddy’s (DRRD) Q1FY24 EBITDA was sharply above our estimate aided by higher US sales, while base business margins ex of Revlimid continued to remain muted and below ~20%. Further thin US pipeline in near term remains a key risk. At CMP, DRRD is trading at expensive valuations of 24x P/E on FY25E adjusted for gRevlimid.

Outlook

We maintain our ‘Reduce’ rating with revised TP of Rs5,150/share (Rs4,500 earlier); valuing at 24x FY25E EPS for base business. Any big ticket ANDA approvals and sharp recovery in base business margins are key risks to our call.

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Dr. Reddy's Laboratories - 27 -07 - 2023 - prabhu