Prabhudas Lilladher's research report on Dr. Reddy's Laboratories
Dr. Reddy’s (DRRD) Q1FY25 EBITDA was 14% above our estimate aided by higher gRevlimid sales. The base business margins and US sales ex of gRevlimid and PLI incentives continued to remain weak. Further thin US pipeline in near term and competition in certain key products remains a key risk. Our FY25 and FY26E EPS stands increased by 3% and 8% as we factor in higher gRevlimid sales. At CMP, DRRD is trading at expensive valuations of 30x P/E on FY26E adjusted for gRevlimid.
Outlook
We maintain our ‘Reduce’ rating with TP of Rs6,000/share; valuing at 26x FY26E 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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