Bank of America has increased the target price for Dr. Reddy's Laboratories Ltd. and reiterated its 'buy' call on the stock. The price target has been hiked to Rs 1,500 from Rs 1,450, to accommodate revenue from new high value launches that are lined up for the company.
This includes approval of Sema in Canada in late October, and filing of abatacept BLA in late CY25 and acceptance by US Food and Drug Administration or USFDA, according to BofA's report.
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BofA expects $150- $200 million revenues from each of these launches in FY27-28. "We believe Sema's competitive landscape in Canada at launch could meaningfully change the revenue opportunity (bull case scenario implies $500Mn)."
For abatacept, the brokerage assumes slower share gain in FY28 (15% share in IV that is 50% of the drug). But it could see faster ramp-up based on the trends seen in other biosim launches in the medical benefit segment ($300 million assuming 30% share), the research firm added.
A key downside risk for the company in the near term is tariff announcement, given its presence in the United States, "While there is expectation of limited impact from potential tariffs, our calculations indicate 5% Ebitda impact for DRRD in case of 10% tariff," stated BofA. The implied value for DRRD in the US business in the current market cap is relatively limited and hence poses as a significant downside risk, it said.
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