Dr. Reddy's Laboratories Ltd. share price target

We are initiating coverage on DR REDDY with BUY rating and a target price of Rs 5,270 (PE of 25x for FY23E earnings) which implies an upside of 19% from the current levels.

Other operating income at Rs. 118 million compared to Rs. 3.8 billion in Q1FY20. Previous year included Rs. 3.5 billion received from Celgene pursuant to an agreement entered towards settlement of any claim the Company or its affiliates may have had for damages under section 8 of the Canadian Patented Medicines (Notice of Compliance) Regulations in regard to the Company's ANDS for a generic version of REVLIMID brand capsules,...

DRRD is well-placed to erosion in the base business, b) robust ANDA launches for the US segment, c) improving benefit from cost rationalization, d) a favorable demand-supply scenario in the PSAI segment, and e) synergy benefit through the addition of the Wockhardt portfolio. After three years of YoY decline in US sales, DRRD exhibited 5% growth in FY20, led by new launches, improved market share, and the reduced impact of price erosion in the base portfolio. The PSAI business has remained sluggish over the past three years, with a CAGR With a strong order book, a favorable demand-supply scenario, and the low base of the past year, DRRD delivered 88% YoY growth in the PSAI segment in to de-risk API supplies and b) stocking up on APIs in preparation of unexpected We expect the PSAI business to post a CAGR of 23% over FY2022 as clients focus on alternate sources of RMs to de-risk their businesses.

Despite challenging times, the US remains a key driver for the company, contributing ~37% to total revenues as of FY20. The company has a strong pending pipeline comprising 99 ANDAs (54 Para IV filings, 28 FTFs) and two NDAs under 505 (b) (2) route. We expect US sales to grow at a CAGR of...

We downgrade DRRD to HOLD (earlier Accumulate) due to limited upside potential at current valuation. We retain our earnings estimates and TP of Rs4,326 (PE 24x FY22E). DRRD continues to be one of the best companies in large cap pharma space structurally, though there is limited headroom for further upgrade in earnings estimate and PE expansion. However re-rating in...

Strong pipeline and new product launches are the key positives. Additionally, smooth operation ahead of VAI from US FDA for the company's facilities should support topline growth over the medium term. Hence, we upgrade our rating to BUY on the stock with a revised target price of Rs. 4,344 based on 23x FY22E adj. EPS....

Dr Reddy's Labs spurts after Q4 PAT jumps 76% to 764 cr, above estimates On a consolidated basis, the drug major recorded net profit of Rs 781.10crore in Q4 March 2020 compared with net profit of Rs 455.40 crore in Q4 March 2019. Consolidated revenues rose...

Dr Reddy's Laboratories has been catering to the needs of the pharmaceutical sector for over two decades. Active Pharmaceutical Ingredients (API) are their core strength, having a wide range of portfolio. The company also manufactures generic medicines with business spread across India, Russia, US and Germany as well as Proprietary Products which inlcudes NCE research, biologics business and differentiated formulations conducted in the US. Under this the...

Strong Results on Inventory Stocking:Revenues for the quarter increased by 10% to Rs 44.3 bn due to strong performance in US and Europe.

We continue to believe that DRRD is one of the best play in large-cap pharma space a) due to its control on overhead expenses, b) focus on domestic business, c) injectable pipeline for US and EU, d) net cash on books and e) resolution for all major FDA issues. Over FY21-22E, DRRD will likely see change is business mix with high margin domestic formulation (17% of...