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Dr. Reddy's Laboratories Ltd (RDY)
NYSE:RDY
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Dr Reddy's Laboratories
(NYSE:RDY)
Rating:74Outperform
Price Target:
$16.00
▲(11.58% Upside)
Dr Reddy's Laboratories (RDY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.87B
Dividend Yield0.64%
Average Volume (3M)1.19M
Price to Earnings (P/E)17.7
Beta (1Y)0.48
Revenue Growth13.13%
EPS Growth-0.47%
CountryUS
Employees27,048
SectorHealthcare
Sector Strength51
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)0.20
Shares Outstanding834,546,900
10 Day Avg. Volume877,733
30 Day Avg. Volume1,186,652
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.04
Enterprise Value/Revenue0.04
Enterprise Value/Gross Profit0.06
Enterprise Value/Ebitda0.13
Forecast
1Y Price Target
$16.00Price Target Upside11.58% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Dr Reddy's Laboratories Business Overview & Revenue Model
Company DescriptionDr. 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 Others segments. The company's Global Generics segment manufactures and markets prescription and over-the-counter finished pharmaceutical products that are marketed under a brand name or as a generic finished dosages with therapeutic equivalence to branded formulations. This segment also engages in the biologics business. The PSAI segment manufactures and markets active pharmaceutical ingredients and intermediates, which are principal ingredients for finished pharmaceutical products. This segment also provides contract research services; and manufactures and sells active pharmaceutical ingredients and steroids in accordance with the specific customer requirements. Its Proprietary Products segment focuses on the research and development of differentiated formulations. The Others segment engages in developing therapies in the fields of oncology and inflammation. The therapeutic categories primarily include gastro-intestinal, cardiovascular, anti-diabetic, dermatology, oncology, respiratory, stomatology, urology, and nephrology. The company has a collaboration, license, and option agreement with Curis, Inc. to discover, develop, and commercialize small molecule antagonists for immuno-oncology and precision oncology targets. Dr. Reddy's Laboratories Limited was incorporated in 1984 and is headquartered in Hyderabad, India.
How the Company Makes MoneyDr. Reddy's Laboratories generates revenue primarily through the sale of generic pharmaceuticals, which include both branded and unbranded versions of established drugs. The company also earns significant income from the production and sale of active pharmaceutical ingredients (APIs) to other pharmaceutical companies. Additional revenue streams include contributions from its proprietary brands and over-the-counter (OTC) products. The company has established partnerships with various organizations for research and development, co-marketing arrangements, and distribution, which enhance its market reach and profitability. Factors contributing to its earnings include the company's ability to successfully navigate regulatory approvals, efficient production processes, and strategic expansions into new markets and therapeutic areas.
Dr Reddy's Laboratories Earnings Call Summary
Earnings Call Date:Jul 29, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Oct 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed performance with solid revenue growth in several segments and strategic advancements in biosimilars and environmental achievements. However, challenges remain with declines in the U.S. generics market and a decrease in gross profit margins, along with regulatory observations from the USFDA.Q1-2026 Updates
Positive Updates
Double-Digit Revenue Growth
Revenue grew by 11% year-over-year, driven by broad-based performance across most markets, except the U.S. generics business.
Biosimilar Business Momentum
Gained momentum through strategic collaboration with Alvotech for pembrolizumab, a biosimilar Keytruda, and sustained commitment to biosimilar development.
Environmental Leadership
Dr. Reddy's Carbon Disclosure Project (CDP) rating was elevated to an A, placing it among the top 2% globally.
India Business Growth
India business delivered a double-digit year-on-year growth of 11% with a 13% sequential increase, driven by new products and pricing.
Negative Updates
US Generics Revenue Decline
North American business revenue declined by 17% year-on-year and 4% sequentially, primarily due to price erosion in selected products.
Gross Profit Margin Decline
Consolidated gross profit margin decreased by 350 basis points year-on-year, attributed to price erosion and lower operating leverage.
Observations from USFDA Inspections
USFDA issued Form 483 observations for multiple facilities, including Middleburg API facility and CTO-5 API facility, requiring responses.
Company Guidance
During Dr. Reddy's Laboratories' Q1 FY '26 earnings call, the company reported a steady double-digit revenue growth of 11% year-over-year, translating to INR 8,545 crores (USD 997 million). The EBITDA margin stood at 26.7%, slightly surpassing their target of 25%. However, the gross profit margin decreased by 350 basis points year-over-year to 56.9%, mainly due to price erosion in the generic segment, particularly lenalidomide. The SG&A expenses rose 13% year-over-year to INR 2,565 crores (USD 299 million), driven by strategic investments in consumer health care and nutraceuticals. R&D spend was INR 624 crores (USD 73 million), accounting for 7.3% of sales. The company maintained a net cash surplus of INR 2,922 crores (USD 341 million) and hedged USD 648 million using derivative contracts. The effective tax rate for the quarter was 25.9%, with the profit after tax reaching INR 1,419 crores (USD 166 million). Looking ahead, Dr. Reddy's anticipates growth driven by new product launches and strategic investments, although the U.S. generics market showed some softness.Dr Reddy's Laboratories Financial Statement Overview
Summary
Dr Reddy's Laboratories demonstrates strong financial performance with consistent revenue and profit growth. The company maintains a solid balance sheet with low financial leverage and robust cash flow generation, despite a slight decline in cash flow indicators.Income Statement
Dr Reddy's Laboratories demonstrates strong financial performance with consistent revenue and profit growth. The company achieved a Gross Profit Margin of 58.5% and a Net Profit Margin of 17.4% for the fiscal year ending March 2025. Revenue growth rate from 2024 to 2025 was 16.6%, indicating a robust growth trajectory. EBIT Margin and EBITDA Margin were 22.1% and 29.7%, respectively, showcasing efficient cost management and operational profitability.85
Very Positive
Balance Sheet
The balance sheet of Dr Reddy's Laboratories reflects a solid financial position with a strong equity base. The Debt-to-Equity Ratio stands at a manageable 0.14, indicating low financial leverage. Return on Equity (ROE) is impressive at 16.96% for the year ending March 2025, suggesting effective utilization of equity to generate profits. The Equity Ratio is 67.6%, highlighting a strong capital structure with a significant portion of assets financed by equity.82
Very Positive
Cash Flow
Dr Reddy's Laboratories portrays a stable cash flow position with a Free Cash Flow to Net Income Ratio of 0.21 for the fiscal year ending March 2025. The Operating Cash Flow to Net Income Ratio is 0.82, indicating robust cash generation capabilities relative to net income. Despite a decrease in Free Cash Flow from the previous year, the company's cash flow remains healthy and supports its operational and investment needs.78
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 325.54B | 325.54B | 279.16B | 245.88B | 214.39B | 189.72B |
| Gross Profit | 190.43B | 190.43B | 163.61B | 202.97B | 113.84B | 103.08B |
| EBITDA | 95.20B | 96.67B | 88.42B | 74.43B | 47.74B | 45.71B |
| Net Income | 56.54B | 56.54B | 55.68B | 45.07B | 23.57B | 17.24B |
Balance Sheet | ||||||
| Total Assets | 492.99B | 492.99B | 387.52B | 322.85B | 296.65B | 265.49B |
| Cash, Cash Equivalents and Short-Term Investments | 57.91B | 57.91B | 81.47B | 66.75B | 44.37B | 34.57B |
| Total Debt | 46.77B | 46.77B | 20.02B | 13.47B | 33.84B | 30.31B |
| Total Liabilities | 155.82B | 155.82B | 106.97B | 89.99B | 106.13B | 90.51B |
| Stockholders Equity | 333.39B | 333.39B | 280.55B | 232.86B | 190.53B | 174.98B |
Cash Flow | ||||||
| Free Cash Flow | 12.03B | 12.03B | 18.00B | 40.01B | 9.06B | 23.14B |
| Operating Cash Flow | 46.43B | 46.43B | 45.43B | 58.87B | 28.11B | 35.70B |
| Investing Cash Flow | -58.08B | -58.08B | -40.28B | -41.37B | -26.39B | -22.66B |
| Financing Cash Flow | 18.91B | 18.91B | -3.76B | -26.86B | -2.42B | -298.00M |
Dr Reddy's Laboratories Technical Analysis
Positive
14.34
Price Trends
14.37
Negative
14.39
Negative
14.15
Positive
Market Momentum
-0.02
Negative
53.29
Neutral
30.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDY, the sentiment is Positive. The current price of 14.34 is above the 20-day moving average (MA) of 14.19, below the 50-day MA of 14.37, and above the 200-day MA of 14.15, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 53.29 is Neutral, neither overbought nor oversold. The STOCH value of 30.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RDY.
Dr Reddy's Laboratories Risk Analysis
Dr Reddy's Laboratories disclosed 60 risk factors in its most recent earnings report. Dr Reddy's Laboratories 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 Peers Comparison
Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $13.93B | 41.44 | 13.39% | ― | 18.42% | 1.47% | |
74 Outperform | $11.87B | 17.74 | 17.48% | 0.64% | 13.13% | -0.47% | |
66 Neutral | $3.00B | 1,492.19 | 106.97% | ― | 9.81% | ― | |
59 Neutral | $12.04B | ― | -19.77% | 4.57% | -7.47% | -438.39% | |
58 Neutral | $21.51B | ― | -2.31% | ― | 2.43% | 64.37% | |
51 Neutral | $7.92B | -0.43 | -41.67% | 2.21% | 22.29% | -1.85% | |
51 Neutral | $3.20B | ― | -1.32% | 5.06% | -2.32% | 35.46% |
* Healthcare Sector Average
Performance Comparison
RDY
Dr Reddy's Laboratories
14.34
-1.42
-9.01%
VTRS
Viatris
10.50
-0.25
-2.33%
NBIX
Neurocrine
144.10
23.93
19.91%
PRGO
Perrigo Company
22.65
-3.88
-14.62%
TEVA
Teva Pharmaceutical
18.95
0.87
4.81%
AMRX
Amneal Pharmaceuticals
9.62
1.23
14.66%
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.