Dr. Reddy's Laboratories Ltd (RDY)
NYSE:RDY
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Dr Reddy's Laboratories
(NYSE:RDY)
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Rating:70Outperform
Price Target:
$15.00
▲(7.22% Upside)
Action:UpgradedDate:01/26/26
The score is driven primarily by strong fundamentals (profitability, growth, and low leverage), tempered by weaker cash-flow conversion. Earnings-call takeaways are moderately positive due to pipeline progress and strong liquidity, but near-term margins and regulatory delays add risk. Technicals are neutral-to-soft and valuation is reasonable with a low dividend yield.
Positive Factors
Conservative balance sheet & strong ROE
Low leverage and consistently strong returns on equity provide durable financial flexibility. This capital efficiency supports funding R&D, M&A, and commercial expansion while absorbing cyclical or regulatory shocks, underpinning sustainable shareholder returns over the medium term.
Negative Factors
U.S. biologics regulatory setbacks
Regulatory inspection failures and CRLs materially delay entry of key biosimilars into the U.S. market. Such timing setbacks compress near‑term revenue and push out ROI on biologics investments, highlighting execution and third‑party manufacturing risk for long‑term biosimilars growth.
Read all positive and negative factors
Positive Factors
Negative Factors
Conservative balance sheet & strong ROE
Low leverage and consistently strong returns on equity provide durable financial flexibility. This capital efficiency supports funding R&D, M&A, and commercial expansion while absorbing cyclical or regulatory shocks, underpinning sustainable shareholder returns over the medium term.
Read all positive factors
Dr Reddy's Laboratories (RDY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.28B
Dividend Yield0.64%
Average Volume (3M)2.26M
Price to Earnings (P/E)21.7
Beta (1Y)0.44
Revenue Growth6.61%
EPS Growth1.21%
CountryUS
Employees27,048
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)67.97
Shares Outstanding834,617,900
10 Day Avg. Volume2,073,773
30 Day Avg. Volume2,256,186
Financial Highlights & Ratios
PEG Ratio10.58
Price to Book (P/B)2.82
Price to Sales (P/S)2.89
P/FCF Ratio78.16
Enterprise Value/Market Cap100.38
Enterprise Value/Revenue3.27
Enterprise Value/Gross Profit5.93
Enterprise Value/Ebitda12.08
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusModerate Sell
Number of Analyst Covering1
EPS Forecast (FY)0.59
Revenue Forecast (FY)$3.87B
Dr Reddy's Laboratories 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 Laboratories generates revenue through multiple streams. The primary source of income is from the sale of generic pharmaceuticals, which are marketed under its own brand names and sold in various markets worldwide. The company also earn...
Dr Reddy's Laboratories Earnings Call Summary
Earnings Call Date:Jan 27, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 12, 2026
Earnings Call Sentiment Positive
The call reflects a mixed but overall constructive picture: the company demonstrated resilient top-line growth (+4.4% YoY) driven by strong performance in India and emerging markets (double-digit growth) and meaningful pipeline and commercial milestones (semaglutide authorization in India, abatacept filings, European denosumab approval). Liquidity remains healthy (net cash surplus ~USD 342m) and integration of acquisitions is progressing. Offsetting these positives are margin compression, profit declines, continued U.S. generics weakness due to Lenalidomide decline, regulatory/inspection-related delays for some biosimilars (denosumab, rituximab) and elevated SG&A driven by strategic investments and a one-time labor-code provision. On balance the positive operational momentum, pipeline progress and strong cash position modestly outweigh the near-term margin and regulatory challenges.Positive Updates
Revenue Growth and Base Business Momentum
Consolidated Q3 FY'26 revenue INR 8,727 crores (USD 971m), up 4.4% YoY (down 0.9% QoQ). Underlying base business excluding Lenalidomide delivered double-digit growth, aided by favorable forex.
Negative Updates
Margin Compression and Profit Declines
Consolidated gross margin 53.6%, down 505 bps YoY and 104 bps QoQ; reported EBITDA margin 23.5% (adjusted 24.8% excluding one-time labor-code provision). EBITDA INR 2,049 crores (USD 228m), down 11% YoY and 13% QoQ. PAT INR 1,210 crores (USD 135m), down 14% YoY and 16% QoQ; diluted EPS INR 14.52.
Read all updates
Q3-2026 Updates
Positive
Negative
Revenue Growth and Base Business Momentum
Consolidated Q3 FY'26 revenue INR 8,727 crores (USD 971m), up 4.4% YoY (down 0.9% QoQ). Underlying base business excluding Lenalidomide delivered double-digit growth, aided by favorable forex.
Read all positive updates
Company Guidance
Management reiterated forward guidance of R&D at 7–8% of revenues and an underlying EBITDA margin of about 25% (Q3 adjusted 24.8% vs reported 23.5%), with post‑Lenalidomide gross margins for global generics/PSA guided to a 50–55% range; Q3 reported metrics were revenue INR 8,727 crore ($971m, +4.4% YoY), EBITDA INR 2,049 crore ($228m), PAT INR 1,210 crore ($135m) and diluted EPS INR 14.52. SG&A was INR 2,692 crore (~31% of revenue, ~30% excluding the one‑off) and management expects moderation in SG&A growth (discretionary spends controlled and SG&A growth to be less than half of revenue growth). Balance‑sheet and cash targets include operating working capital INR 14,142 crore, capex INR 669 crore ($75m) this quarter, free cash flow INR 374 crore ($42m), net cash surplus INR 3,069 crore ($342m) and hedges of USD 481m (at INR ~89.1–90.3) and RUB 2.93bn; pipeline/timing guidance: semaglutide India launch March 21 (Canada Feb–May goal date, Brazil/Turkey ~July; ~12m cartridge capacity, filings in 80+ markets), abatacept IV BLA filed (US target end‑calendar 2026; subcu target Jan/Feb 2028; Europe filing July 2026 with ~12‑month review and a July 2027 launch), while denosumab and rituximab face CRLs/inspections likely pushing US timing into mid‑to‑late FY‑27 or beyond.Dr Reddy's Laboratories Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
86
Very Positive
Cash Flow
63
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 | 2.56B |
| Gross Profit | 190.84B | 190.43B | 163.61B | 139.34B | 113.84B | 1.30B |
| EBITDA | 93.77B | 96.67B | 88.42B | 74.43B | 45.08B | 534.77M |
| Net Income | 56.59B | 56.54B | 55.68B | 45.07B | 23.57B | 232.21M |
Balance Sheet | ||||||
| Total Assets | 562.90B | 492.99B | 387.52B | 321.85B | 292.83B | 3.63B |
| Cash, Cash Equivalents and Short-Term Investments | 82.59B | 57.91B | 81.47B | 61.80B | 44.37B | 472.87M |
| Total Debt | 67.73B | 46.77B | 20.02B | 13.47B | 33.84B | 414.53M |
| Total Liabilities | 187.14B | 155.82B | 106.97B | 90.86B | 102.30B | 1.26B |
| Stockholders Equity | 372.37B | 333.39B | 280.55B | 230.99B | 190.53B | 2.37B |
Cash Flow | ||||||
| Free Cash Flow | 24.26B | 12.03B | 18.00B | 40.01B | 9.06B | 23.14B |
| Operating Cash Flow | 63.11B | 46.43B | 45.43B | 58.88B | 28.11B | 35.70B |
| Investing Cash Flow | -52.33B | -58.08B | -40.28B | -41.37B | -26.39B | -22.66B |
| Financing Cash Flow | -6.12B | 18.91B | -3.76B | -26.86B | -2.42B | -298.00M |
Dr Reddy's Laboratories Technical Analysis
Negative
13.99
Price Trends
13.94
Negative
13.86
Negative
14.05
Negative
Market Momentum
-0.23
Negative
45.30
Neutral
35.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDY, the sentiment is Negative. The current price of 13.99 is above the 20-day moving average (MA) of 13.39, above the 50-day MA of 13.94, and below the 200-day MA of 14.05, indicating a bearish trend. The MACD of -0.23 indicates Negative momentum. The RSI at 45.30 is Neutral, neither overbought nor oversold. The STOCH value of 35.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $13.46B | 22.95 | 16.67% | ― | 21.45% | 41.73% | |
70 Outperform | $11.28B | 21.72 | 16.00% | 0.64% | 6.61% | 1.21% | |
61 Neutral | $41.54B | 23.59 | 20.09% | ― | 5.76% | ― | |
58 Neutral | $4.18B | 16.36 | -67.91% | ― | 7.64% | ― | |
56 Neutral | $17.70B | -10.55 | -22.99% | 3.99% | -2.61% | -456.43% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
48 Neutral | $1.57B | -0.34 | -35.16% | 8.48% | -2.75% | -761.90% |
* Healthcare Sector Average
RDY
Dr Reddy's Laboratories
13.35
-0.45
-3.27%
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Dr Reddy's Laboratories Corporate Events
Dr. Reddy’s Russian Subsidiary Faces VAT Reclassification Penalty Deemed Immaterial
Jan 26, 2026
On January 23, 2026, Dr. Reddy’s Laboratories LLC, Russia, a step-down wholly owned subsidiary of Dr. Reddy’s Laboratories Limited, received a tax audit decision from the Interdistrict Inspectorate of the Federal Tax Service of Russia,...
Dr. Reddy’s Launches First-to-Market Generic of Extra-Strength Pataday in U.S. OTC Eye-Care Segment
Jan 15, 2026
On January 14, 2026, Dr. Reddy’s Laboratories announced it had launched in the U.S. market an over-the-counter Olopatadine Hydrochloride Ophthalmic Solution USP, 0.7%, the first-to-market generic equivalent of Extra Strength Pataday Once Dai...
Dr. Reddy’s Receives USFDA Post-Application Action Letter for Bachupally Biologics Facility
Jan 12, 2026
On January 10, 2026, Dr. Reddy’s Laboratories disclosed that, following a pre-approval inspection by the U.S. Food and Drug Administration (USFDA) at its biologics manufacturing facility in Bachupally, Hyderabad conducted in relation to a pr...
Dr. Reddy’s to Announce Q3 FY26 Results and Host Earnings Call on January 21, 2026
Jan 9, 2026
On January 8, 2026, Dr. Reddy’s Laboratories announced that it will release its financial results for the quarter and nine months ended December 31, 2025 (Q3 FY26) on Wednesday, January 21, 2026, following a meeting of its board of directors...
Dr. Reddy’s Faces GST Penalty Orders for FY 2018–23, Sees No Material Financial Impact
Jan 2, 2026
On January 1, 2026, Dr. Reddy’s Laboratories disclosed that it has received five separate orders from the Goods and Services Tax (GST) Authority, specifically from the Joint Commissioner in the Office of the Principal Commissioner of Central...
Dr. Reddy’s Faces FDA Setback on AVT03 Denosumab Biosimilar After Manufacturing Inspection
Dec 31, 2025
On December 31, 2025, Dr. Reddy’s Laboratories disclosed that its wholly owned Swiss subsidiary received a Complete Response Letter from the U.S. Food and Drug Administration for the Biologics License Application for AVT03 (denosumab), a pro...
Dr. Reddy’s Schedules January 21 Board Meeting to Review Q3 FY26 Results, Closes Trading Window
Dec 23, 2025
On December 23, 2025, Dr. Reddy’s Laboratories announced that its Board of Directors will meet on January 21, 2026 to consider and approve the company’s unaudited standalone and consolidated financial results for the quarter ended Dece...
Dr. Reddy’s Laboratories to Engage with Investors at Chennai Conference
Dec 16, 2025
Dr. Reddy’s Laboratories announced its participation in an investor conference organized by Investec on December 22, 2025, in Chennai. This engagement reflects the company’s ongoing efforts to maintain transparency and strengthen relat...
Dr. Reddy’s Laboratories Receives USFDA Observations Post-Inspection
Dec 16, 2025
On December 12, 2025, Dr. Reddy’s Laboratories announced that the United States Food Drug Administration (USFDA) completed a Good Manufacturing Practice (GMP) and Pre-Approval Inspection (PAI) at its formulations facility in Srikakulam, And...
Dr. Reddy’s Laboratories Allots Equity Shares Under ESOPs
Dec 10, 2025
On December 9, 2025, Dr. Reddy’s Laboratories announced the allotment of 9,165 equity shares to eligible employees under its Employee Stock Options Schemes of 2002 and 2007. This move is part of the company’s ongoing efforts to reward ...
Dr. Reddy’s and Immutep Forge Strategic Partnership for Eftilagimod Alfa
Dec 8, 2025
On December 8, 2025, Dr. Reddy’s Laboratories announced a strategic collaboration and exclusive licensing agreement with Immutep SAS to develop and commercialize Eftilagimod Alfa, a novel cancer immunotherapy, outside North America, Europe, ...
Dr. Reddy’s Laboratories to Engage with Investors at Singapore Conference
Dec 3, 2025
Dr. Reddy’s Laboratories announced its participation in an investor conference organized by Bank of America in Singapore on December 8-9, 2025. This engagement is part of the company’s ongoing efforts to maintain transparency and commu...
Dr. Reddy’s Laboratories to Engage with Investors at Tokyo Conference
Nov 28, 2025
On November 28, 2025, Dr. Reddy’s Laboratories announced its participation in an upcoming investor conference organized by Nomura in Tokyo, Japan, scheduled for December 4-5, 2025. This engagement underscores the company’s proactive ap...
Dr. Reddy’s Gains EU Approval for Denosumab Biosimilar
Nov 25, 2025
Dr. Reddy’s Laboratories announced on November 24, 2025, that it has received European Commission approval for AVT03, a biosimilar of Prolia® and Xgeva®, which are used to treat osteoporosis and prevent bone complications in cancer...
Dr. Reddy’s Laboratories Schedules Investor Conferences for November 2025
Nov 18, 2025
Dr. Reddy’s Laboratories announced its participation in several investor conferences scheduled for late November 2025. These meetings, organized by Investec, Citi, and HSBC, will take place in Mumbai, Hyderabad, and Hong Kong, respectively, ...
Dr. Reddy’s Laboratories to Engage with Investors at Mumbai Conference
Nov 17, 2025
On November 17, 2025, Dr. Reddy’s Laboratories announced its participation in an investor conference organized by JM Financial, scheduled for November 21, 2025, in Mumbai. This meeting, which will be conducted in person, aims to engage with ...
Dr. Reddy’s API Facility Passes USFDA Inspection with Zero Observations
Nov 17, 2025
On November 14, 2025, Dr. Reddy’s Laboratories announced that the United States Food Drug Administration (USFDA) completed a Good Manufacturing Practice (GMP) inspection at their API facility in Srikakulam, Andhra Pradesh, with zero observa...
Dr. Reddy’s Laboratories Allots Equity Shares Under ESOP
Nov 13, 2025
On November 13, 2025, Dr. Reddy’s Laboratories announced the allotment of 7,430 equity shares to eligible employees under its Employees Stock Options Scheme, 2002. This move reflects the company’s commitment to employee engagement and ...
Dr. Reddy’s Announces Resignation of Global Head of Biologics
Nov 12, 2025
Dr. Reddy’s Laboratories announced the resignation of Mr. Jayanth Sridhar, the Global Head of Biologics, effective January 31, 2026. This change in senior management is part of the company’s ongoing adjustments to its leadership team, ...
Dr. Reddy’s Receives Non-Compliance Notice for Semaglutide Injection in Canada
Oct 29, 2025
On October 29, 2025, Dr. Reddy’s Laboratories received a Notice of Non-Compliance from the Pharmaceutical Drugs Directorate in Canada concerning their Abbreviated New Drug Submission for Semaglutide Injection. The notice requests additional ...
Dr. Reddy’s Releases Q3 2025 Earnings Call Recordings
Oct 27, 2025
On October 25, 2025, Dr. Reddy’s Laboratories announced the availability of audio recordings from their earnings call conducted on October 24, 2025. This call covered the financial results for the quarter ending September 30, 2025. The relea...
Dr. Reddy’s Laboratories Releases Q2 2025 Financial Results
Oct 27, 2025
On October 25, 2025, Dr. Reddy’s Laboratories announced the publication of its unaudited financial results for the quarter and half-year ending September 30, 2025. These results were advertised in the Financial Express and Andhra Prabha news...
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.