Dr. Reddy's Laboratories Ltd. (IN:DRREDDY)
:DRREDDY
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Dr. Reddy's Laboratories Ltd.
(DRREDDY)
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Rating:70Outperform
Price Target:
₹1,359.00
▲(6.14% Upside)
Action:DowngradedDate:01/26/26
The score is driven primarily by strong profitability and a conservative balance sheet, tempered by weaker cash conversion. The earnings call was constructive on guidance and pipeline progress, but near-term headwinds (post-Lenalidomide margin pressure and U.S. regulatory uncertainty) keep the score from being higher, while technicals are mixed and valuation is only moderately supportive.
Positive Factors
High and sustainable margins
Consistently strong gross and net margins provide structural profitability advantages vs peers, enabling reinvestment in R&D, branded growth and capacity. High margins also create a buffer against pricing cycles, supporting durable cash generation and return metrics over the medium term.
Negative Factors
Weak cash conversion
Earnings are not translating into proportional cash, indicating working‑capital or investment drains. Persistently low cash conversion constrains internal funding for R&D, capex and acquisitions, increases reliance on external financing and magnifies execution risk during margin or revenue pressure.
Read all positive and negative factors
Positive Factors
Negative Factors
High and sustainable margins
Consistently strong gross and net margins provide structural profitability advantages vs peers, enabling reinvestment in R&D, branded growth and capacity. High margins also create a buffer against pricing cycles, supporting durable cash generation and return metrics over the medium term.
Read all positive factors
Dr. Reddy's Laboratories Ltd. (DRREDDY) vs. iShares MSCI India ETF (INDA)
Market Cap
₹1.02T
Dividend Yield0.63%
Average Volume (3M)225.11K
Price to Earnings (P/E)21.9
Beta (1Y)0.68
Revenue Growth14.10%
EPS Growth9.72%
CountryIN
Employees27,048
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)14.52
Shares Outstanding834,617,900
10 Day Avg. Volume499,682
30 Day Avg. Volume225,111
Financial Highlights & Ratios
PEG Ratio11.98
Price to Book (P/B)2.88
Price to Sales (P/S)2.95
P/FCF Ratio50.79
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
₹1,390.00Price Target Upside8.56% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)54.2
Revenue Forecast (FY)₹355.45B
Dr. Reddy's Laboratories Ltd. Business Overview & Revenue Model
Company Description
Dr. Reddy's Laboratories Limited, together with its subsidiaries, operates as an integrated pharmaceutical company worldwide. It operates through Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), Proprietary Products, and Oth...
How the Company Makes Money
Dr. Reddy's generates revenue primarily through the sale of generic pharmaceuticals, which constitute a significant portion of its earnings. The company develops and markets a diverse portfolio of generic drugs, often capitalizing on the expiratio...
Dr. Reddy's Laboratories Ltd. Earnings Call Summary
Earnings Call Date:Jan 21, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Neutral
The quarter shows resilience in core branded businesses (India, emerging markets, NRT) with meaningful product-launch and pipeline progress, healthy cash position and strategic collaborations. However, earnings and margins were pressured by lower Lenalidomide revenue, pricing erosion in unbranded generics, elevated SG&A and one-time labor provisions, and regulatory uncertainties for key biologics in the U.S. The business is executing on strategic priorities and long-term growth drivers, but near-term financial headwinds and regulatory timing create caution.Positive Updates
Consolidated Revenue Growth
Consolidated revenue of INR 8,727 crore (USD 971m) in Q3 FY'26, up 4.4% YoY (down 0.9% QoQ); underlying base business (ex-Lenalidomide) delivered double-digit growth aided by favorable forex.
Negative Updates
Lenalidomide Decline and North America Pressure
Lower Lenalidomide sales materially impacted U.S. results; North America generics revenue $338m, down 16% YoY and 9% QoQ, with the company noting the decline was primarily due to Lenalidomide and pricing pressure.
Read all updates
Q3-2026 Updates
Positive
Negative
Consolidated Revenue Growth
Consolidated revenue of INR 8,727 crore (USD 971m) in Q3 FY'26, up 4.4% YoY (down 0.9% QoQ); underlying base business (ex-Lenalidomide) delivered double-digit growth aided by favorable forex.
Read all positive updates
Company Guidance
The management reiterated clear near‑term and medium‑term guidance: underlying EBITDA should be about 25% (Q3 adjusted was 24.8%), R&D spend is guided at 7–8% of revenues (Q3 R&D was INR 615 crore, ~7% of revenue, 6.8% ex one‑offs), and SG&A (Q3 INR 2,692 crore) is expected to moderate from the current ~30% of revenue excluding one‑offs (Q3 reported ~31%) with any structural labor‑code impact likely <50 bps; gross margin for Global Generics/PSA in a post‑Lenalidomide (from Q4) scenario is expected broadly in the 50–55% range. They confirmed capital and cash metrics (Q3 CapEx INR 669 crore, free cash flow INR 374 crore, operating working capital INR 14,142 crore, net cash surplus $342m, annualized ROCE 20.4%) and hedges (USD 481m at INR 89.1–90.3; RUB 2.93bn at RUB1.06). Product and timeline guidance included semaglutide: India launch March 21, Canada expected between Feb–May, Brazil around July, with ~12m‑cartridge capacity initially and filings/partner deals across ~80+ markets; abatacept IV BLA filed (Dec‑2025) with US launch targeted end‑calendar 2026 and sub‑cut filing in July 2026 (patent expiry/launch ~Jan/Feb 2028) and Europe launch ~July 2027; denosumab/rituximab in the U.S. face CRL/inspection timing uncertainty. Other operational notes: underlying base business is growing double‑digit (India organic ~17–18% this quarter, innovation ~10–15% of India sales), NRT integration is ~85% operational with completion by fiscal year‑end, and Aurigene CDMO is expected to scale (management cited ~$100m+ opportunity over 2–3 years).Dr. Reddy's Laboratories Ltd. Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
84
Very Positive
Cash Flow
62
Positive
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 345.83B | 325.54B | 279.16B | 245.88B | 214.39B | 189.72B |
| Gross Profit | 190.84B | 190.43B | 163.61B | 139.34B | 113.84B | 103.08B |
| EBITDA | 88.83B | 88.84B | 79.29B | 66.05B | 47.74B | 45.71B |
| Net Income | 56.59B | 56.54B | 55.68B | 45.07B | 23.57B | 17.24B |
Balance Sheet | ||||||
| Total Assets | 562.90B | 492.99B | 387.52B | 322.85B | 296.65B | 265.49B |
| Cash, Cash Equivalents and Short-Term Investments | 82.59B | 57.91B | 81.47B | 61.80B | 44.37B | 34.57B |
| Total Debt | 79.34B | 46.77B | 20.02B | 13.47B | 33.84B | 30.31B |
| Total Liabilities | 187.14B | 155.82B | 106.97B | 89.99B | 106.13B | 90.51B |
| Stockholders Equity | 372.37B | 333.39B | 280.55B | 230.99B | 190.53B | 173.06B |
Cash Flow | ||||||
| Free Cash Flow | 27.88B | 18.92B | 18.00B | 40.01B | 9.06B | 23.14B |
| Operating Cash Flow | 62.53B | 46.43B | 45.43B | 58.87B | 28.11B | 35.70B |
| Investing Cash Flow | -45.63B | -51.02B | -40.28B | -41.37B | -26.39B | -22.66B |
| Financing Cash Flow | -12.24B | 11.86B | -3.76B | -26.86B | -2.42B | -298.00M |
Dr. Reddy's Laboratories Ltd. Technical Analysis
Negative
1280.40
Price Trends
1263.53
Negative
1255.79
Negative
1262.51
Negative
Market Momentum
-10.22
Positive
39.64
Neutral
16.98
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:DRREDDY, the sentiment is Negative. The current price of 1280.4 is below the 20-day moving average (MA) of 1282.43, above the 50-day MA of 1263.53, and above the 200-day MA of 1262.51, indicating a bearish trend. The MACD of -10.22 indicates Positive momentum. The RSI at 39.64 is Neutral, neither overbought nor oversold. The STOCH value of 16.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IN:DRREDDY.
Dr. Reddy's Laboratories Ltd. Risk Analysis
Dr. Reddy's Laboratories Ltd. disclosed 60 risk factors in its most recent earnings report. Dr. Reddy's Laboratories Ltd. reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Dr. Reddy's Laboratories Ltd. Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | ₹775.92B | 18.87 | ― | 0.33% | 7.33% | -3.79% | |
72 Outperform | ₹1.04T | 20.49 | ― | 0.57% | 15.49% | 64.37% | |
72 Outperform | ₹869.64B | 22.07 | ― | 1.19% | 14.01% | 14.62% | |
70 Outperform | ₹1.02T | 21.88 | ― | 0.63% | 14.10% | 9.72% | |
68 Neutral | ₹964.01B | 45.14 | ― | 0.87% | 6.93% | 21.55% | |
66 Neutral | ₹1.35T | 51.30 | ― | 0.84% | 9.11% | 18.76% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
IN:DRREDDY
Dr. Reddy's Laboratories Ltd.
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10.41%
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Dr. Reddy's Laboratories Ltd. Corporate Events
Dr. Reddy’s Publishes Audio Recording of Q3 FY2026 Earnings Call
Jan 21, 2026
Dr. Reddy’s Laboratories has notified stock exchanges that the audio recording of its earnings call for the quarter ended December 31, 2025, held on January 21, 2026, has been made publicly available via a web link on the company’s web...
Dr. Reddy’s Releases Q3 FY26 Unaudited Results Investor Presentation
Jan 21, 2026
Dr. Reddy’s Laboratories Ltd. has released an investor presentation detailing its unaudited financial results for the third quarter of fiscal year 2026, covering the period ended 31 December 2025. The disclosure, made under Indian securities...
Dr. Reddy’s Gets USFDA Post-Application Action Letter for Hyderabad Biologics Plant
Jan 10, 2026
Dr. Reddy’s Laboratories has received a Post-Application Action Letter from the US Food and Drug Administration following a pre-approval inspection of its biologics manufacturing facility at Bachupally, Hyderabad. The company said it will wo...
Dr. Reddy’s Laboratories Receives USFDA Observations Post-Inspection
Dec 12, 2025
Dr. Reddy’s Laboratories Ltd. announced that the USFDA completed a GMP and Pre-Approval Inspection at its formulations facility in Srikakulam, Andhra Pradesh. The inspection, which took place from December 4 to December 12, 2025, resulted in...
Dr. Reddy’s Laboratories to Engage with Investors at Hyderabad Conference
Dec 12, 2025
Dr. Reddy’s Laboratories Ltd. has announced its participation in an upcoming investor conference organized by BK Securities in Hyderabad. This engagement is part of the company’s ongoing efforts to maintain transparency and engage with...
Dr. Reddy’s Laboratories Releases Q2 FY26 Earnings Call Transcript
Oct 30, 2025
Dr. Reddy’s Laboratories Ltd. has released the transcript of its earnings call for the quarter and half-year ending September 30, 2025. This disclosure is part of the company’s compliance with regulatory requirements, and the transcrip...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.