Dr. Reddy's Laboratories Ltd. share price target

In Q3FY24, Dr. Reddy’s posted a 6.6% Y-o-Y (+4.8% Q-o-Q) rise in revenue to Rs. 72,368 Mn (vs. our estimate of Rs. 71,872 Mn). The growth was driven by US sales (53.1% of revenue) growing at 9.6% Y-o-Y (+5.7% Q-o-Q) to Rs. 33,492 Mn (vs. our estimate of Rs. 32,707 Mn), 4.7% Y-o-Y (-0.5% Q-o-Q) growth in India revenue (18.7% of revenue) to Rs. 11,800 Mn (vs. our estimate of Rs. 11,950 Mn), 15.5% Y-o-Y (-6.0% Q-o-Q) rise in Europe revenue (7.9% of revenue) to Rs. 4,970 Mn (vs. our estimate of Rs. 5,207 Mn) while PSAI revenue (10.9% of revenue) increased 1.0% Y-o-Y (+11.4% Q-o-Q) to Rs. 7,839 Mn (vs. our estimate of Rs. 7,913 Mn); partially offset by Emerging Market revenue declining at 2.0% Y-o-Y (+5.5% Q-o-Q) to Rs. 12,833 Mn (vs. our estimate of Rs. 13,359
Mn).

We believe the company's strategy of investing in various businesses may provide growth in the long term. Recommendation: HOLD

Healthy quarter with revenue/PAT coming in 3%/4% ahead of consensus; US sales a positive surprise, rising 6% QoQ

In Q2FY24, Dr. Reddy’s reported the highest quarterly revenue and profits. The Company generated revenue of INR 69,026 Mn, which grew by 9.0% YoY and 2.1% QoQ. Global Generics reported revenue of INR 61,084 Mn which is a YoY growth of 9.0%, this growth was mainly driven by North America and Europe.

We believe the company's strategy of investing in various businesses may provide growth in the long term

Q2 revenue in line but PAT outdid consensus by 22% on account of PLI benefits, litigation settlement and interest income