Emkay Global Financial recommended hold rating on Dr. Reddy's with a target price of Rs 4550 in its research report dated September 07, 2020.
Emkay Global Financial's report on Dr. Reddy's
US launch momentum to continue: DRRD noted that its US business, which had recorded muted growth during FY15-19 due to warning letters, has come out of the slowgrowth phase and showed good momentum in FY20 with more launches. The momentum should continue as DRRD plans over 25 launches FY21 onward. The price erosion has also tapered compared to the last few years. Injectable demand is lower than pre-Covid levels but picking up MoM. DRRD would continue to develop specialty products and monetize but will not commercialize. DRRD has responded to Copaxone CRL and will respond to Nuvaring CRL by Q3FY21.
Outlook
We are positive on the business but await better entry points, given the sharp outperformance in recent times. We retain Hold and EW in EAP. Our TP of Rs4,550 is based on 25xJune’22E EPS.
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