Dr. Reddy's Laboratories Ltd (RDY)
NYSE:RDY
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Dr Reddy's Laboratories
(NYSE:RDY)
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Rating:67Neutral
Price Target:
$14.50
▲(3.65% Upside)
Action:Downgraded
Date:05/15/26
The score is driven mainly by solid but weakening fundamentals (margin/ROE compression and higher debt despite growth) and a balanced earnings-call outlook that points to FY27 margin recovery but highlights near-term profitability and working-capital risks. Technicals are neutral-to-soft and valuation support is limited given the P/E and low yield.
Positive Factors
Product pipeline & launches
Semaglutide approvals (Canada, India) plus planned ~12M-pen rollout and an accepted abatacept BLA create durable, higher-margin specialty and biosimilar revenue streams. These differentiated launches diversify away from plain generics, support long-term revenue mix improvement and first-mover advantage in key markets.
Negative Factors
Margin erosion
Sustained margin compression reflects price erosion in unbranded generics and product mix shifts; lower margins mean less internal cash to fund R&D and capex and reduce ROE. If pricing pressure persists, structural profitability and capacity to invest in specialty launches could be impaired across the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Product pipeline & launches
Semaglutide approvals (Canada, India) plus planned ~12M-pen rollout and an accepted abatacept BLA create durable, higher-margin specialty and biosimilar revenue streams. These differentiated launches diversify away from plain generics, support long-term revenue mix improvement and first-mover advantage in key markets.
Read all positive factors
Dr Reddy's Laboratories (RDY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.60B
Dividend Yield0.64%
Average Volume (3M)2.84M
Price to Earnings (P/E)23.9
Beta (1Y)0.46
Revenue Growth-1.06%
EPS Growth-26.67%
CountryUS
Employees27,048
SectorHealthcare
Sector Strength45
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)51.52
Shares Outstanding834,617,900
10 Day Avg. Volume3,142,838
30 Day Avg. Volume2,843,423
Financial Highlights & Ratios
PEG Ratio-1.16
Price to Book (P/B)2.91
Price to Sales (P/S)3.05
P/FCF Ratio33.56
Enterprise Value/Market Cap99.21
Enterprise Value/Revenue3.41
Enterprise Value/Gross Profit6.47
Enterprise Value/Ebitda15.41
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusModerate Sell
Number of Analyst Covering1
EPS Forecast (FY)0.54
Revenue Forecast (FY)$3.76B
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 makes money primarily by selling finished pharmaceutical products and, to a lesser extent, APIs and related services across global markets.
Key revenue streams include:
- Generic prescription medicines (finished dosage forms): The lar...
Dr Reddy's Laboratories Earnings Call Summary
Earnings Call Date:May 12, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jul 29, 2026
Earnings Call Sentiment Neutral
Balanced. The call highlighted several strategic achievements — record annual revenues, robust product launch and filing cadence, first-to-market semaglutide approval in Canada, abatacept BLA acceptance, completed NRT integration, and strong sustainability recognition. However, Q4 was materially affected by one-off charges (notably a large shelf-stock adjustment and impairments), significant margin pressure (Q4 gross margin down ~760 bps YoY), a sharp quarterly EBITDA decline (-37% YoY), and North America revenue weakness tied to loss of lenalidomide. Management emphasized that many negatives are one-offs or timing/regulatory related and reiterated confidence in base business growth, margin recovery (>50% gross margin target) and semaglutide/abatacept-driven upside, but near-term profitability and working capital remain areas of concern.Positive Updates
Record Annual Revenues
Adjusted full-year revenue of INR 34,046 crores (USD 3.63B), a 4.6% year-over-year increase; company noted 'highest ever annual revenues' despite product-specific headwinds.
Negative Updates
Large One-Off Charges Impacting Reported Profit
Shelf-stock adjustment (SSA) on lenalidomide of INR 453 crores reduced Q4 revenue; additional VAT provision INR 114 crores in Q4 SG&A; impairment charges INR 259 crores in Q4 (INR 352 crores for year) including write-downs for discontinued CAR-T programs and a partnered asset.
Read all updates
Q4-2026 Updates
Positive
Negative
Record Annual Revenues
Adjusted full-year revenue of INR 34,046 crores (USD 3.63B), a 4.6% year-over-year increase; company noted 'highest ever annual revenues' despite product-specific headwinds.
Read all positive updates
Company Guidance
Management guided that the underlying base business should sustain double‑digit growth and that gross margin will improve to above 50% in FY27; key targets and metrics called out included adjusted Q4 revenue excl. the lenalidomide SSA of INR 7,969 crore (USD 849m) and FY26 adjusted revenue INR 34,046 crore (USD 3.63bn), adjusted EBITDA of INR 1,554 crore (19.5%) in Q4 and INR 8,419 crore (24.7%) for FY26, adjusted PBT of INR 994 crore (12.5%) in Q4 and INR 6,463 crore (19%) for FY26 (reported PBTs INR 199 crore Q4 / INR 5,482 crore FY), PAT INR 220 crore Q4 / INR 4,285 crore FY, diluted EPS INR 2.64 Q4 / INR 51.42 FY, operating working capital INR 14,434 crore, capex guidance around INR 2,000 crore next year, FY26 free cash flow INR 2,004 crore and net cash surplus INR 3,271 crore; they expect SG&A to stay at roughly FY26 nominal levels (~31–33% of revenue), R&D to be 7–8% of revenue, and an effective tax rate of 24–25% in FY27. On semaglutide management reiterated prior volume guidance of ~12 million pens in FY27 (about 6–7m by end‑CY26), price floor in the c.$25–$30 per unit range, an expected 3–4m pens/quarter cadence from approved markets with ~50:50 direct vs partner sales and launches in 50+ markets (80+ in 12 months); abatacept IV BLA has been accepted with a likely early‑CY27 launch and biosimilars are expected to scale materially (management referenced potential biosimilar revenue in the mid‑hundreds of millions to roughly $0.5–0.7bn in coming years).Dr Reddy's Laboratories Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
74
Positive
Cash Flow
70
Positive
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 353.47B | 325.54B | 279.16B | 245.88B | 214.39B |
| Gross Profit | 186.52B | 190.43B | 163.61B | 139.34B | 113.84B |
| EBITDA | 70.55B | 96.67B | 88.42B | 74.43B | 45.08B |
| Net Income | 45.09B | 56.54B | 55.68B | 45.07B | 23.57B |
Balance Sheet | |||||
| Total Assets | 567.88B | 492.99B | 387.52B | 321.85B | 292.83B |
| Cash, Cash Equivalents and Short-Term Investments | 86.08B | 57.91B | 81.47B | 61.80B | 44.37B |
| Total Debt | 75.81B | 46.77B | 20.02B | 13.47B | 33.84B |
| Total Liabilities | 194.95B | 155.82B | 106.97B | 90.86B | 102.30B |
| Stockholders Equity | 369.60B | 333.39B | 280.55B | 230.99B | 190.53B |
Cash Flow | |||||
| Free Cash Flow | 32.10B | 12.03B | 18.00B | 40.01B | 9.06B |
| Operating Cash Flow | 56.65B | 46.43B | 45.43B | 58.88B | 28.11B |
| Investing Cash Flow | -70.53B | -58.08B | -40.28B | -41.37B | -26.39B |
| Financing Cash Flow | 13.40B | 18.91B | -3.76B | -26.86B | -2.42B |
Dr Reddy's Laboratories Technical Analysis
Positive
13.99
Price Trends
13.46
Positive
13.71
Positive
13.92
Negative
Market Momentum
0.04
Negative
55.67
Neutral
83.34
Negative
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 13.99 is above the 20-day moving average (MA) of 13.46, above the 50-day MA of 13.46, and above the 200-day MA of 13.92, indicating a neutral trend. The MACD of 0.04 indicates Negative momentum. The RSI at 55.67 is Neutral, neither overbought nor oversold. The STOCH value of 83.34 is Negative, 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
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $15.76B | 16.73 | 21.64% | ― | 28.59% | 120.51% | |
67 Neutral | $11.60B | 23.89 | 11.76% | 0.64% | -1.06% | -26.67% | |
61 Neutral | $19.39B | 22.12 | -1.97% | 3.99% | 2.14% | 91.93% | |
61 Neutral | $41.60B | 23.59 | 20.79% | ― | 5.76% | ― | |
60 Neutral | $3.96B | 16.36 | -144.72% | ― | 7.62% | ― | |
52 Neutral | $1.55B | -0.83 | -50.65% | 8.48% | -3.62% | -932.84% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
RDY
Dr Reddy's Laboratories
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-5.09%
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Dr Reddy's Laboratories Corporate Events
Dr. Reddy’s Unveils FY 2026 Results, Dividend and Board, Auditor Changes
May 12, 2026
On 12 May 2026, Dr. Reddy’s Laboratories disclosed to the U.S. SEC that it had published its audited financial results for the quarter and full year ended 31 March 2026, making IFRS and Ind AS consolidated and standalone statements publicly ...
Dr. Reddy’s Files Q4 FY26 Audited Results Presentation with Exchanges
May 12, 2026
On May 12, 2026, Dr. Reddy’s Laboratories filed a Form 6-K with the U.S. Securities and Exchange Commission, furnishing an intimation to stock exchanges about its audited financial results for the quarter and financial year ended March 31, 2...
Dr. Reddy’s posts audio of March-quarter 2026 earnings call for investors
May 12, 2026
Dr. Reddy’s Laboratories has notified stock exchanges that it has made available an audio recording of its earnings call for the quarter ended March 31, 2026, which was conducted on May 12, 2026. The disclosure, made under India’s list...
Dr. Reddy’s Revamps Board, Auditors and Senior Leadership in May 12 Governance Push
May 12, 2026
On May 12, 2026, Dr. Reddy’s Laboratories’ board approved several governance and leadership changes, reinforcing its oversight structure ahead of upcoming shareholder meetings. The company moved to reappoint former civil servant and po...
Dr. Reddy’s Schedules May 2026 Investor Conferences in Mumbai and Singapore
May 12, 2026
On May 11, 2026, Dr. Reddy’s Laboratories announced its upcoming participation in a series of analyst and institutional investor meetings organized by international banks. The company notified stock exchanges in India and the U.S., underscor...
Dr. Reddy’s Grants Over 1.19 Million Employee Stock Options Under ESOP and ADR Schemes
May 11, 2026
On May 11, 2026, Dr. Reddy’s Laboratories’ Nomination, Governance and Compensation Committee approved a significant grant of employee stock options under its existing share-based compensation plans. The company granted 816,119 Indian s...
Dr. Reddy’s Board to Weigh Final FY 2025–26 Dividend on April 16 Disclosure
Apr 16, 2026
On April 16, 2026, Dr. Reddy’s Laboratories filed a Form 6-K with the U.S. Securities and Exchange Commission, providing an update to investors as a foreign private issuer under the Securities Exchange Act of 1934. The filing, signed by the ...
Dr. Reddy’s Divests Svaas Wellness Subsidiary in Small April 2026 Deal
Apr 8, 2026
On April 7, 2026, Dr. Reddy’s Laboratories signed an agreement to sell its entire shareholding in its wholly owned subsidiary Svaas Wellness Limited to Enspirit Technology Services Private Limited for INR 2.23 crore. The sale, which was comp...
Dr. Reddy’s Allots Equity Shares Under ESOP on March 26, 2026
Mar 26, 2026
On March 26, 2026, Dr. Reddy’s Laboratories allotted 3,675 fully paid equity shares of face value Re.1 each to eligible employees following the exercise of stock options under the Dr. Reddy’s Employees ADR Stock Option Scheme, 2007. Th...
Dr. Reddy’s Tightens Insider-Information Disclosure Code After Board Approval
Mar 24, 2026
On March 24, 2026, Dr. Reddy’s Laboratories’ board approved an amended Code of Practices and Procedures for Fair Disclosures of Unpublished Price Sensitive Information, aligning its internal framework with India’s SEBI insider tr...
Dr. Reddy’s Schedules May 12 Board Meeting to Approve FY 2026 Results, Closes Trading Window
Mar 23, 2026
Dr. Reddy’s Laboratories has notified stock exchanges that its board of directors will meet on May 12, 2026 to consider the audited standalone and consolidated financial results for the quarter and full financial year ended March 31, 2026. T...
Dr. Reddy’s Launches India’s First DCGI-Approved Generic Semaglutide Obeda for Type 2 Diabetes
Mar 23, 2026
On March 21, 2026, Dr. Reddy’s Laboratories launched Obeda, India’s first Drugs Controller General of India–approved generic semaglutide injection for type 2 diabetes, marking a Day-1 entry into the GLP-1 receptor agonist space. ...
Dr. Reddy’s Faces GST Penalty Orders for FY 2019–22, Sees No Material Impact
Mar 17, 2026
Dr. Reddy’s Laboratories disclosed that it has received three orders from the GST Authority’s Commercial Taxes Department, Office of the Joint Commissioner (ST), Chennai Intelligence-II. The orders, issued and received on March 16, 202...
Dr. Reddy’s Flags Phase III Setback as Immutep Halts Key Lung Cancer Trial
Mar 13, 2026
Dr. Reddy’s Laboratories has disclosed that its wholly owned subsidiary, Dr. Reddy’s Laboratories SA, is affected by a major clinical setback involving its partner Immutep SAS. On March 13, 2026, Immutep said an Independent Data Monito...
Dr. Reddy’s Allots New ESOP Shares, Slightly Increases Equity Capital
Mar 12, 2026
On March 12, 2026, Dr. Reddy’s Laboratories allotted 10,275 fully paid equity shares of Re.1 each to eligible employees following the exercise of stock options under its 2002 Employee Stock Options Scheme and 2007 ADR Stock Option Scheme. Th...
Dr. Reddy’s Cleared by Delhi High Court to Export Semaglutide to Non-Patent Markets
Mar 12, 2026
On March 9, 2026, the Division Bench of the Delhi High Court upheld an earlier Single-Judge order allowing Dr. Reddy’s Laboratories to manufacture the diabetes and obesity drug ingredient Semaglutide in India for export to countries where or...
Dr. Reddy’s Cleared as U.S. DOJ Closes FCPA Inquiry Without Enforcement
Mar 6, 2026
On March 6, 2026, Dr. Reddy’s Laboratories announced that the U.S. Department of Justice has closed its inquiry into allegations of improper payments to healthcare professionals in Ukraine and potentially other countries. The probe, first di...
Dr. Reddy’s Schedules Analyst and Investor Meets for Early March 2026
Feb 27, 2026
Dr. Reddy’s Laboratories has notified stock exchanges that its management will meet analysts and institutional investors at two upcoming conferences in early March 2026. The company will join an in-person group meeting hosted by Ambit Capita...
Dr. Reddy’s Says SEC Ends FCPA Probe Without Recommending Enforcement Action
Feb 24, 2026
Dr. Reddy’s Laboratories has been under scrutiny since an anonymous complaint in 2020 alleged improper payments to healthcare professionals in Ukraine and potentially other countries, raising possible violations of U.S. anti-corruption laws ...
Dr. Reddy’s Buys Progynova HRT Brands in India to Bolster Gynecology Portfolio
Feb 18, 2026
On February 18, 2026, Dr. Reddy’s Laboratories announced it had entered into a definitive agreement with UK-based Mercury Pharma Group to acquire the Indian trademarks and related assets of hormone replacement therapy brands Progynova® ...
Dr. Reddy’s Allots 12,665 ESOP Shares, Nudging Up Equity Capital
Feb 17, 2026
On February 17, 2026, Dr. Reddy’s Laboratories allotted 12,665 fully paid equity shares of Re.1 each to eligible employees following the exercise of stock options under its 2002 Employee Stock Options Scheme and 2007 ADR Stock Option Scheme....
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.
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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.