Dr. Reddy's Laboratories Ltd. (IN:DRREDDY)
:DRREDDY
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Dr. Reddy's Laboratories Ltd.
(DRREDDY)
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Rating:72Outperform
Price Target:
₹1,480.00
▲(15.59% Upside)
Action:ReiteratedDate:04/24/26
The score is driven primarily by strong profitability and a low-leverage, net-cash balance sheet, partially offset by weaker cash conversion. Technicals are mixed (above moving averages but negative MACD and RSI below 50). Valuation is moderate with a low dividend yield, while earnings-call takeaways are balanced: clear guidance and pipeline progress are tempered by post-Lenalidomide margin pressure and U.S. regulatory timing risk.
Positive Factors
Strong profitability
Sustained gross (~56%) and net (~17%) margins indicate durable operating economics versus peers, enabling the firm to fund R&D and branded initiatives. Strong margin base supports reinvestment, resilience to pricing cycles, and consistent return generation even if some product-specific pressures persist.
Negative Factors
Regulatory uncertainty for biologics
Regulatory setbacks (CRL, post-application actions and Form 483 observations) create material timeline and approval risk for high-margin biologics. Delays or re-inspections can push commercialization out multiple quarters, undermining projected revenue and return profiles for biologics investments.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong profitability
Sustained gross (~56%) and net (~17%) margins indicate durable operating economics versus peers, enabling the firm to fund R&D and branded initiatives. Strong margin base supports reinvestment, resilience to pricing cycles, and consistent return generation even if some product-specific pressures persist.
Read all positive factors
Dr. Reddy's Laboratories Ltd. (DRREDDY) vs. iShares MSCI India ETF (INDA)
Market Cap
₹1.10T
Dividend Yield0.63%
Average Volume (3M)225.11K
Price to Earnings (P/E)21.9
Beta (1Y)0.57
Revenue Growth11.01%
EPS Growth5.28%
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
₹1,232.50Price Target Upside-3.74% Downside
Rating ConsensusModerate Sell
Number of Analyst Covering2
EPS Forecast (FY)53.96
Revenue Forecast (FY)₹356.05B
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 makes money primarily by selling pharmaceutical products and related supplies across several major revenue streams. (1) Generic pharmaceuticals: A significant portion of revenue comes from developing and launching generic versions of o...
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
1266.08
Negative
1255.21
Negative
1257.64
Negative
Market Momentum
-15.11
Positive
47.36
Neutral
69.59
Neutral
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 above the 20-day moving average (MA) of 1244.37, above the 50-day MA of 1266.08, and above the 200-day MA of 1257.64, indicating a bearish trend. The MACD of -15.11 indicates Positive momentum. The RSI at 47.36 is Neutral, neither overbought nor oversold. The STOCH value of 69.59 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | ₹821.14B | 18.87 | ― | 0.33% | 7.31% | 0.34% | |
72 Outperform | ₹1.10T | 21.88 | ― | 0.63% | 11.01% | 5.28% | |
72 Outperform | ₹1.05T | 20.49 | ― | 0.57% | 18.86% | 61.69% | |
72 Outperform | ₹932.93B | 22.07 | ― | 1.19% | 17.27% | 8.99% | |
68 Neutral | ₹1.05T | 45.14 | ― | 0.87% | 5.08% | -8.91% | |
66 Neutral | ₹1.39T | 51.30 | ― | 0.84% | 12.74% | 22.02% | |
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 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...
Dr. Reddy’s Posts Q3 FY26 Earnings Call Transcript for Investors
Jan 27, 2026
Dr. Reddy’s Laboratories has notified stock exchanges that it has made available the official transcript of its earnings call for the quarter ended 31 December 2025, held on 21 January 2026, on the company’s website in accordance with ...
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.