Dr. Reddy's Laboratories Ltd. share price target

Higher gRevlimid sales, in our view, formed the premise for Dr. Reddy’s Laboratories’ (DRL) Q1FY25 beat. US sales soared 20.3% YoY to USD 462mn riding on market share gains in existing products.

The company met our estimates across lines for FY24; outperformed on sales/Gross Profits (+6.5%/+7.9%) basis but underperformed on EBITDA/adj. PAT (-2.2%/-5.1%) basis in Q4FY24
? The company is in an extensive R&D and marketing and promotions mode in order to bring out more NCEs, Consumer Health and biosimilar products to mitigate impact of its key product in the US like gRevlimid going off patent by the beginning of Q4FY26

DRRD reported largely in-line revenue/EBITDA, but higher tax aided in PAT beat

We have HOLD on the stock.

Dr. Reddy’s Lab (DRRD) delivered 4QFY24 revenue in line with our estimate.
However, EBITDA was lower than expected due to higher SGA expenses and
R&D spending. In addition to US generics/branded generics segments, DRRD is
enhancing its offering through JVs/partnerships/acquisitions in nutraceuticals,
vaccine, women’s health and dietary supplement space.

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