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Motilal Oswal Report
The brokerage Motilal Oswal cuts its earnings estimate for Dr. Reddy's Laboratories Ltd. by 25%/8% for FY27/FY28, factoring in -
- reduced profitability post-competition in g-Revlimid,
- delay in semaglutide launches in certain markets like Brazil/Canada,
- pricing pressure in the generics portfolio, and
- lower operating leverage.
The brokerage values Dr. Reddy's at 18x 12 months forward earnings to arrive at target price of Rs 1,195.
Dr. Reddy's earnings decelerated in FY25 and FY26 after recording a robust show during FY20-25. Motilal Oswal expects the earnings to further decline in FY27 due to a lower pace of niche launches.
Certain niche products like b-abatacept are under regulatory process, which might revive FY28 earnings, subject to timely approval. Hence the brokerage reiterates its Neutral rating on the stock.
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