Dr. Reddy's Laboratories Ltd. share price target

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%],...

Dr.Reddys Lab s (DRL) revenue, increased by 26.4 percent YoY to Rs 48bn, is higher than our estimates of Rs43.3 bn, primarily due to good growth in Domestic, Europe and Emerging market and licence fees for three proprietary products.

Revenues grew 26.1% YoY to | 4812.8 crore (I-direct estimate: | 4587.1 crore) on the back of sale of three proprietary products (| 720 crore). EBITDA margins expanded 221.4 bps to 22.1% (I-direct estimate: 26.6%) mainly due to sale of proprietary products and lower R&D; spend. Delta vis--vis I-direct estimates was mainly due to an adverse product mix. EBITDA grew 40.1% YoY to | 1063.8 crore against I-direct estimate of | 1222.0 crore. Net profit grew 113.5% YoY to | 1106.8 crore (I-direct estimate: | 790.0 crore). Delta vis--vis EBITDA mainly due to lower tax outgo led by recognition of...

PSAI/EM/EU drive growth: Adjusting for one-time income of INR7.2b as license fee for two brands, sales increased 7.5% YoY to INR40.8b (our estimate: INR41.9b) in 2QFY20, led by PSAI (+18% YoY), EMs (+10% YoY) and Europe (+44% YoY), partly offset by muted growth in the US (flat YoY). For...

control on overheads with its ongoing program of rationalized assets, products and global presence. Employee and SGA costs decreased by 2% and 1% respectively, while R&D; costs increased only by 1% QoQ. Its adoption of new strategy with cost-benefit analysis of each operational activity helps to limit the reduction of adj. EBITDA margin only by 20bps QoQ to 19.2%, despite one-off inventory adjustment, adverse forex (USD/INR), price erosion in core US generis and recalls of Ranitidine. Adjusted with one-off income of...