Dr. Reddy's Laboratories Ltd. (IN:DRREDDY)
:DRREDDY
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Dr. Reddy's Laboratories Ltd.
(DRREDDY)
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Rating:67Neutral
Price Target:
₹1,373.00
▲(7.23% Upside)
Action:Downgraded
Date:05/14/26
The score reflects solid underlying financial strength (healthy margins, conservative leverage, positive free cash flow) tempered by FY2026 revenue/margin softness and only moderate cash conversion. Technicals are mixed/neutral and valuation is average (P/E ~24 with modest yield). Earnings-call guidance supports a recovery narrative, but near-term results and regulatory timing risks keep the score in the mid-range.
Positive Factors
High profit margins
Sustainably high gross and EBITDA margins provide structural cash generation and buffer against pricing cycles. These margins support continued R&D, commercial investment and dividends, enabling strategic optionality and resilience across the 2–6 month horizon and beyond.
Negative Factors
Revenue & margin softness
A year-on-year revenue decline and meaningful margin compression highlight structural pressures (pricing, mix, and product transitions). Sustained top-line softness reduces free cash flow and hampers ability to accelerate R&D or margin-restoring investments without execution risk.
Read all positive and negative factors
Positive Factors
Negative Factors
High profit margins
Sustainably high gross and EBITDA margins provide structural cash generation and buffer against pricing cycles. These margins support continued R&D, commercial investment and dividends, enabling strategic optionality and resilience across the 2–6 month horizon and beyond.
Read all positive factors
Dr. Reddy's Laboratories Ltd. (DRREDDY) vs. iShares MSCI India ETF (INDA)
Market Cap
₹1.08T
Dividend Yield0.63%
Average Volume (3M)225.11K
Price to Earnings (P/E)25.3
Beta (1Y)0.47
Revenue Growth3.19%
EPS Growth-24.30%
CountryIN
Employees27,048
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)51.43
Shares Outstanding834,630,000
10 Day Avg. Volume499,682
30 Day Avg. Volume225,111
Financial Highlights & Ratios
PEG Ratio-1.01
Price to Book (P/B)2.77
Price to Sales (P/S)3.11
P/FCF Ratio34.24
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
₹1,075.00Price Target Upside-16.04% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering1
EPS Forecast (FY)51.1
Revenue Forecast (FY)₹358.52B
Dr. Reddy's Laboratories Ltd. Business Overview & Revenue Model
Company Description
Established in 1984 and headquartered in Hyderabad, India, Dr. Reddy's Laboratories Limited functions as a fully integrated global pharmaceutical entity. Its business is structured into several core divisions. The Global Generics segment is respon...
How the Company Makes Money
Dr. Reddy's makes money primarily by selling pharmaceutical products and related services across domestic and international markets. The largest revenue stream typically comes from finished dosage formulations (FDFs), where the company manufacture...
Dr. Reddy's Laboratories Ltd. Earnings Call Summary
Earnings Call Date:May 12, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jul 22, 2026
Earnings Call Sentiment Neutral
Mixed: the company reported its highest-ever annual revenues and demonstrated resilient base-business growth across geographies, secured important regulatory approvals (semaglutide in Canada, oral semaglutide and abatacept BLA acceptance) and maintained cash and dividend strength. However, Q4 profitability was materially affected by one-offs — notably a large lenalidomide shelf-stock adjustment (INR 453 crores), higher impairment and provisions, and significant margin compression and EBITDA decline. Management expects margins and R&D/run-rate improvements in FY'27 and has set clear pipeline and commercial milestones that could restore profitability, but near-term results remain impacted by the one-time items and some regulatory delays.Positive Updates
Record Annual Revenue and Base Business Growth
Highest-ever annual revenues: adjusted FY'26 revenue INR 34,046 crores (USD 3.63 billion), up 4.6% YoY. Underlying base business delivered double-digit growth in Q4 and for the full year (excluding lenalidomide).
Negative Updates
Large One-Time Shelf-Stock Adjustment (Lenalidomide)
Shelf-stock adjustment (SSA) related to lenalidomide of INR 453 crores taken as revenue reduction in Q4, materially impacting North America results. North America Q4 revenue reported $199M; excluding SSA $251M but still down substantially (company cited a 40% decline YoY on that basis).
Read all updates
Q4-2026 Updates
Positive
Negative
Record Annual Revenue and Base Business Growth
Highest-ever annual revenues: adjusted FY'26 revenue INR 34,046 crores (USD 3.63 billion), up 4.6% YoY. Underlying base business delivered double-digit growth in Q4 and for the full year (excluding lenalidomide).
Read all positive updates
Company Guidance
Management guided that the underlying base business should sustain double‑digit growth and margins should recover, targeting gross margin above 50% in FY27 (Q4 adjusted gross 48%; FY26 adjusted gross 53.5%) and moving closer to an aspirational ~25% EBITDA margin over time (FY26 adjusted EBITDA ~INR 8,419 crores / 24.7%; Q4 adjusted EBITDA 19.5%). They expect SG&A in nominal terms to be roughly flat with FY26 (SG&A FY26 ~INR 10,435 crores, ~31% of adjusted revenue), R&D to be ~7–8% of revenues going forward (R&D FY26 ex‑one‑offs INR 2,385 crores; Q4 INR 541 crores ~6%), an effective tax rate of ~24–25% in FY27, and FY27 CapEx around INR 2,000 crores. On semaglutide management reiterated ~12 million pens/units across markets in FY27 (roughly 6–7m by end‑calendar 2026), a floor price assumption near $25–30/unit, an expected run‑rate of ~3–4m pens/quarter, and an approximate 50:50 split between direct sales and partner sales; abatacept IV BLA review is underway with a potential launch in early calendar 2027, biosimilars ambition of roughly $0.5–0.7bn annual sales by FY29, and the company entered FY27 with a net cash surplus of INR 3,271 crores (Mar 31, 2026).Dr. Reddy's Laboratories Ltd. Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
78
Positive
Cash Flow
66
Positive
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 335.93B | 325.54B | 279.16B | 245.88B | 214.39B |
| Gross Profit | 177.26B | 190.43B | 163.61B | 139.34B | 113.84B |
| EBITDA | 79.16B | 88.84B | 79.29B | 66.05B | 47.74B |
| Net Income | 42.85B | 56.54B | 55.68B | 45.07B | 23.57B |
Balance Sheet | |||||
| Total Assets | 579.35B | 492.99B | 387.52B | 322.85B | 296.65B |
| Cash, Cash Equivalents and Short-Term Investments | 87.81B | 57.91B | 81.47B | 61.80B | 44.37B |
| Total Debt | 89.54B | 46.77B | 20.02B | 13.47B | 33.84B |
| Total Liabilities | 198.89B | 155.82B | 106.97B | 89.99B | 106.13B |
| Stockholders Equity | 377.06B | 333.39B | 280.55B | 230.99B | 190.53B |
Cash Flow | |||||
| Free Cash Flow | 30.51B | 18.92B | 18.00B | 40.01B | 9.06B |
| Operating Cash Flow | 53.84B | 46.43B | 45.43B | 58.87B | 28.11B |
| Investing Cash Flow | -67.03B | -51.02B | -40.28B | -41.37B | -26.39B |
| Financing Cash Flow | 12.73B | 11.86B | -3.76B | -26.86B | -2.42B |
Dr. Reddy's Laboratories Ltd. Technical Analysis
Positive
1280.40
Price Trends
1286.34
Positive
1276.05
Positive
1264.77
Positive
Market Momentum
-2.56
Negative
56.80
Neutral
51.48
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:DRREDDY, the sentiment is Positive. The current price of 1280.4 is below the 20-day moving average (MA) of 1282.24, below the 50-day MA of 1286.34, and above the 200-day MA of 1264.77, indicating a bullish trend. The MACD of -2.56 indicates Negative momentum. The RSI at 56.80 is Neutral, neither overbought nor oversold. The STOCH value of 51.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
73 Outperform | ₹1.07T | 20.19 | ― | 0.57% | 23.12% | 62.27% | |
71 Outperform | ₹1.51T | 70.63 | ― | 0.84% | 21.40% | 13.19% | |
69 Neutral | ₹1.14T | 29.83 | ― | 0.87% | 2.23% | -26.44% | |
68 Neutral | ₹866.73B | 25.43 | ― | 0.33% | 6.08% | 0.77% | |
67 Neutral | ₹1.08T | 25.30 | ― | 0.63% | 3.19% | -24.30% | |
64 Neutral | ₹1.09T | 22.20 | ― | 1.19% | 16.81% | 11.38% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
IN:DRREDDY
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Dr. Reddy's Laboratories Ltd. Corporate Events
Dr. Reddy’s Wins First Health Canada Nod for Generic Semaglutide Injection
Apr 29, 2026
Dr. Reddy’s Laboratories has received a Notice of Compliance from Health Canada for its generic Semaglutide Injection, making it the first company to gain marketing authorization for this product in Canada. The approval, which arrived ahead ...
Dr. Reddy’s clarifies status of Health Canada review for Semaglutide Injection
Apr 24, 2026
Dr. Reddy’s Laboratories has clarified that a recent media report stating it is still awaiting a major near-term trigger is accurate, confirming it has not yet received Health Canada’s final approval, or Notice of Compliance, for its S...
Dr. Reddy’s Russian arm hit with reduced VAT penalty, seen as immaterial
Apr 14, 2026
Dr. Reddy’s Laboratories has disclosed that its step-down wholly owned subsidiary in Russia, Dr. Reddy’s Laboratories LLC, has received a final penalty decision from the Interdistrict Inspectorate of the Federal Tax Service of Russia. ...
Dr. Reddy’s launches India’s first DCGI‑approved generic semaglutide injection Obeda
Mar 21, 2026
Dr. Reddy’s Laboratories has launched Obeda, India’s first Drugs Controller General of India–approved generic semaglutide injection for Type 2 diabetes, marking its Day‑1 entry into the GLP‑1 receptor agonist therapy ...
Dr. Reddy’s clarifies Delhi High Court ruling on semaglutide exports
Mar 10, 2026
Dr. Reddy’s Laboratories has clarified media reports that the Delhi High Court has allowed it to manufacture the diabetes and obesity drug ingredient semaglutide in India for export. The company said the ruling arises from an ongoing interim...
Dr. Reddy’s Srikakulam Plant Clears USFDA Inspection With VAI Classification
Mar 5, 2026
Dr. Reddy’s Laboratories has received the Establishment Inspection Report from the U.S. Food and Drug Administration for its formulations manufacturing facility at Srikakulam in Andhra Pradesh, following a good manufacturing practice and pre...
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.