Prabhudas Lilladher's research report on Dr. Reddy's Laboratories
Dr. Reddy’s (DRRD) Q2FY23 profitability adjusted for gRevlimid improved QoQ, yet is still below historical levels. We have incorporated gRevlimid in our nos, however ex Revlimid our FY24E and FY25E stands cut by 8% and 5% respectively. We expect exRevlimid margins to improve with easing of commodity and as revenue scale up with new launches in US. India revenues were healthy.
Outlook
At CMP, DRRD is trading at 21x P/E on Sept 2024E adjusted for gRevlimid. We assign 23x Sept 2024E EPS plus Rs250/share for gRevlimid NPV and maintain our ‘Buy’ rating with revised TP of Rs4,900/share (Rs4,750 earlier) as we roll forward. Delay in key ANDA approvals and prolonged inflationary environment of raw material prices are key risks to our call.
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