Dr. Reddy’s Labs - Robust Show In FY23; But Outlook Subdued: Motilal Oswal

Motilal Oswal Report

We assessed the 20F annual filing of Dr. Reddy’s Laboratories Ltd. to understand its FY23 segmental performance and capital utilisation in further details.

Dr. Reddy's exited FY23 on a strong note driven by healthy sales growth (13.5% YoY), better profitability (460 basis point margin expansion) and solid earnings growth (39% YoY).

Further, the company optimised its product offerings in India/North America by selling certain brands for Rs 5 billion and acquiring brands/products for Rs 12 billion in FY23.

Dr. Reddy's significantly improved its return on equity by 600 bps to 19% over FY19-23.

We raise our earnings estimates by 4% each for FY24/FY25 to factor in the incremental opportunities in North America due to regulatory issues in peers and moderation in price erosion in the base portfolio.

As compared to 31% earnings compound annual growth rate over FY21-23, we expect only 6% earnings CAGR over FY23-25. Further, as the valuations factor in the upside adequately, we maintain our 'Neutral' rating on the stock.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.