Dr. Reddy's Laboratories Ltd. share price target

Revenues of the proposed acquired business were | 594 crore in FY19 and at | 377 crore for 9MFY20 (~| 500 crore on annualised basis). The implied valuation comes to ~3.8x annualised revenue. Going by the current trail, the valuation seems in line with industry standard but considering the growth trends of key brands, it is on the higher side. Nevertheless, this acquisition is in sync with the company's overall scheme of the things of being aggressive in branded formulations, especially in India and calibration in the US. Post this acquisition, the domestic business contribution in revenues is...

We have a Neutral rating and a TP of Rs 3,440 based on 20x FY22 EPS. With improved performance across geographies we believe the multiple is well justified. US accounts for 36% of revenues and the key products - gNuvaring and gCopaxone account for ~20% of our FY22 estimates. Despite factoring in these launches along with sustenance of good performance in non US markets and margin expansion as per company guidance, upside appears limited from current market price. Dr. Reddys announced acquisition of select brands of Wockhardt in India and other markets for Rs 18.5bn, which is ~3.7x FY20e sales (Rs 5bn annualised) and ~15x FY20e EV/EBIDTA. The deal adds scale (~17% of India revenues) and deepens Dr Reddys presence in the acute segment. The key 5 brands account for ~50%+ of the acquired portfolio. We expect Dr. Reddys to revive the growth (the acquired portfolio declined 15% yoy due to issues at Wockhardt) with improved serviceability of the products and increased sales & promotion. While we need to analyse the product portfolio in detail, our preliminary analysis suggests that the deal should be 1-2% EPS accretive in FY22. Maintain Neutral. TP of Rs 3,440/sh.

EBITDA increased 24.1% YoY, as EBITDA margin improved 200bps YoY to 23.5%. However, company reported a net loss of Rs. 538cr, impacted by impairment losses worth Rs. 1,320cr, arising from price erosion of...

Strong Revenue Growth Boost Operational Performance: Dr. Reddys Lab s (DRL) revenue, increased by 13.9% YoY to Rs. 43.8 Bn.

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 includes NCE research, biologics business and differentiated formulations conducted in the US. Under this the...

US going through rough patch but promising launches ahead Despite challenging years, the US remains a key driver for the company, contributing ~42% to total revenues. The company has a strong pending pipeline comprising 99 ANDAs (53 Para IV filings, 32 FTFs) and two NDAs under 505 (b) (2) route. We expect US sales to grow at a CAGR of ~9% to...

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.

One-off gains lead to better than expected result Dr. Reddy's Laboratories is an Indian pharmaceutical manufacturer. The company is engaged in manufacturing and marketing of over 190...

estimates. Quarterly profit jumped more than twofold on the back of a one-time tax gain and higher licence fees from sale of brands Revenues Rs.4,812Cr [YoY: 26% Up QoQ: 25% ], Gross Margin 57.50% [Q2 FY20: 51.7%; Q2 FY19: 55%], SG&A; expenses Rs.1678 crore [YoY: 36%; QoQ: 39%], R&D; expenses Rs.366 crore [7.6% of Revenues], Profit before Tax Rs.766 crore [YoY: 33% Up QoQ: -10%],...