27 January 2020 The renewed strategy in the US, the enhanced focus on branded generics in emerging markets and the cost-control initiatives are promising steps that bolster DRRDs earnings prospects. We raise our EPS estimate by 7.3%/8.2%/9.2% for FY20/21/22 to factor in the better outlook in India/Russia, the higher gross margin and the scope of enhancing operating leverage. 3QFY20, driven by all business segments (except the US which grew moderately by 8% YoY to INR16b 36% of sales). Pharmaceutical Services and Active Ingredients (PSAI) segment (16% of sales) grew at 16% YoY to INR6.9b. India business (17% of sales) was up 13% YoY at INR7.6b, while Europe business (7% of sales) grew by 52% YoY. Emerging markets (21% of sales) was up 19% YoY to INR9.2b, led by CIS (+26% YoY) and Russia (+20% YoY). Gross margin expanded 20bp YoY (+260bp QoQ) to 54.1% on an improved product mix.