Dr. Reddy's Laboratories Ltd. share price target

ICICI Securities Ltd | Retail Equity Research Revenues grew 3% YoY to | 3834 crore, above I-direct estimate of | 3574 crore. US sales declined 3% YoY to | 1607 crore (I-direct estimate: | 1434 crore) but grew 12% sequentially mainly due to gRenvela (nephrology) sales. India business grew 3% to | 613 crore (I-direct estimate: | 654 crore) EBITDA margins declined 254 bps YoY to 20.7% but came in above Idirect estimate of 18% mainly due to receiving milestone payment for an out licenced proprietary product of ~| 130 crore...

Major Dr Reddy's Laboratories reported a 28.86 per cent YoY drop in net profit at Rs 334 crore for the December quarter. The company said the numbers were impacted by one-time charge of Rs 93 crore due to deferred tax on assets and liabilities of the US entity. The company had reported a net profit of Rs 470.01 crore in the corresponding quarter of last year. Revenue for the quarter came in at Rs 3806 crore, which was up 3 per. During the quarter, the...

Revenues buoyed by gSevelamar, margins by milestone payment: Dr. Reddys Labs (DRL) revenue increased by 2.7% YoY to Rs 38.1 bn in line with our estimates of Rs 38.2 bn) due to improved contribution from US business in the Global generics business.

Maintain NEUTRAL with a TP of Rs 2,400 (16x Dec19E). Dr. Reddys Labs (DRRD) 3QFY18 was skewed by one-offs. While the top-line growth of ~3% YoY/~7% QoQ was optically positive, it was driven by a Rs 1.3bn milestone payment as a part of DRRDs out-licensing agreement with Encore Dermatology. Adjusted for this, the top-line was flat YoY and showed a slight sequential improvement (~4%). The EBITDA margin at 20.2% was also boosted by the milestone amount.

We upgrade our rating from SELL to NEUTRAL with a revised TP of Rs 2,400 (16x Dec19E). Dr. Reddys Laboratories (DRRD) received an EIR (Establishment Inspection Report) for its Bachupally (plant 3) formulations facility. This leaves DRRD with only the crucial Duvvada facility under significant regulatory action (Srikakulam API plant EIR expected after only 2 483 obs. in re-inspectiion). With ~50% of DRRDs top-line coming from the US business and the majority of this being sold from Bachupally, the risk of escalation to an import alert was a significant investor concern. This has now been eased.

Dr Reddys Labs (DRL) posted poor results for 2QFY2018, which were much lower than expectations. The sales came in at `3,546cr (`3,700cr expected) v/s. `3,586cr, a yoy de-growth of 1.1%. Global Generics at `2,862cr, posted a yoy de-growth of 1.0%, while PSAI at `119cr, registering a yoy de-growth of 2.0%. On operating front, the EBDITA ca..

Dr Reddys Q2 gross margin declined 270 bps YoY, largely led by weak US (-9% YoY) sales. However, EBITDA margin improved 190 bps aided by cost optimization initiatives and lower R&D; which led to 10% YoY growth in EBITDA (~19% above our estimate).

ICICI Securities Ltd | Retail Equity Research Revenues declined marginally 1% YoY to | 3546 crore (I-direct estimate: | 3619 crore). An 11% YoY decline in in the US to | 1432 crore (I-direct estimate: | 1434 crore) due to price erosion was offset by 14% growth in Russia and other CIS to | 410 crore (I-direct estimate: | 432 crore) and 37% growth in Europe to | 242 crore (Idirect estimate: | 222 crore) EBITDA margins rose 146 bps to 19% (I-direct estimate: 18%) due to...

Maintain SELL with a TP of Rs 2,220 (16x Sep19E). Dr. Reddys Labs (DRRD) delivered a mixed top-line performance in 2QFY18. Overall revenue declined 1% YoY, but witnessed growth of ~7% QoQ. Pressure in the US business continued with a 11% decline YoY. There was some relief from the performance in Europe (+34% YoY) and emerging markets (+14% YoY). The EBITDA margin came in at 18.7%, up ~200 bps YoY and ~120bps ahead of estimates.

India recovery below expectations: India business grew ~2% YoY and 36% QoQ. Normalizing for the excise duty impact, domestic growth was ~10% YoY (v/s our expectation of >15%). Key launches to drive US recovery: We expect double-digit price erosion in the US base business in FY18/19E due to the impact of further channel consolidation, and competition in key products like Dacogen, Vidaza, Toprol XL and Fondaparinux. Despite this, we expect the US business to bounce back in FY19 (US sales of USD930m in FY18E and USD1.15b in FY19E). Recent...