Prabhudas Lilladher's research report on Dr. Reddy's Laboratories
Dr. Reddy’s (DRRD) Q4FY23 reported profitability was in line with our estimate. Adjusted for one-time divestment income (Rs2.65bn), EBITDA was 20% below our estimates impacted by lower GMs and higher overheads. Our FY24E and FY25E EPS stands reduced by 10% and 6% as we factor in lower margins ex of gRevlimid.
Outlook
We downgrade stock to Reduce from Buy with revised TP of Rs4,500/share (Rs4,900 earlier). At CMP, DRRD is trading at expensive valuations of 24x P/E on FY25E adjusted for gRevlimid. Any big ticket ANDA approvals and sharp recovery in base business margins are key risks to our call.
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