Dr. Reddy's Share Price Hits One-Month High After Nomura's 'Buy' Upgrade
Dr. Reddy's stock gained the most among Nifty stocks, even as the index fell 1%.
Dr. Reddy's Laboratories Ltd.'s share price rose to hit its highest in over a month, after Nomura upgraded the stock to a 'buy' rating from 'neutral' as it sees favourable risk-reward for the firm.
The stock gained the most among Nifty stocks, even as the index fell 1%. The brokerage has also raised the stock's target price to Rs 1,500, implying nearly 18% upside.
Before this, Nomura's target price for the stock was Rs 6,499, adjusted for the the 5:1 split it becomes Rs 1,299.8.
According to the brokerage, the stock has underperformed the sector over the past one to five years. "Over the past one year, the stock has risen 13% vs the Nifty Pharma index up 36%," it said. "This is despite strong (22.6% earnings CAGR over FY20-25F) growth and upward revisions (FY25/26 consensus EPS estimates up 10-12% over the past 12 months)."
"We think the street is concerned about higher contribution from gRevlimid that could start declining in FY26F," Nomura said. "Furthermore, the overheads have increased significantly in the recent past."
For fiscal 2027, the brokerage has factored in Ebitda margin of 19.6%, much below peers, as gRevlimid contribution recedes, overhead spends remain high and revenues from new initiatives do not fully play out.
However, it argued for a higher valuation multiple, as it expects earnings growth can accelerate in fiscal 2028.
Dr. Reddy's Share Price Today
The scrip rose as much as 2.5% to Rs 1,307 apiece, the highest level since Nov. 7. It pared gains to trade 2.2% higher at Rs 1,304.40 apiece, as of 10:07 a.m. This compares to a 1.01% decline in the NSE Nifty 50.
It has risen 12.5% on a year-to-date basis. Total traded volume so far in the day stood at 1.01 times its 30-day average. The relative strength index was at 63.8
Out of 40 analysts tracking the company, 13 maintain a 'buy' rating, 13 recommend a 'hold' and 11 suggest 'sell', according to Bloomberg data. The average 12-month analysts' consensus price target implies an upside of 4.4%.
