Dr. Reddy's - Nicotinell Acquisition To Boost OTC Presence: ICICI Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Securities Report.Dr. Reddy’s Laboratories Ltd. has entered into a definitive agreement to acquire Nicotinell, a nicotine replacement therapy brand of Haleon, for £500 million. Dr. Reddy's will initially pay £458 million and £42 million will be paid based on performance-based milestones in CY25 and H1 CY26. Nicotinell is available in gum, lozenge and patch forms and Dr. Reddy's may market this brand across 30 countries in Europe, Asia, Latin America, Australia, New Zealand and Canada. The acquired portfolio had sales of £217 million in CY23, up 8% YoY. The acquisition may boost Dr. Reddy’s FY26E revenue by ~9% and over-the-counter contribution can jump from 10% in FY24 of sales to ~17% in FY26E. The deal is priced at reasonable valuation of 2.3 times/9.2 times CY23 enterprise value/sales and EV/Ebitda. The acquired portfolio is manufactured at CMOs and may not require high capex investments. The deal will be funded through cash ($ 980 million at end of FY24) and is likely to be closed in Q3 FY25. We raise earnings per share estimates for FY25/26E by 1%/3%, respectively. Maintain Hold with target price raised to Rs 6,250 (earlier Rs 6,050)..Key downside risks: Delay in launching new products, regulatory hurdles and higherthan-anticipated competition for Revlimid. Key upside risks: M&A in India and U.S., cost optimisation..Click on the attachment to read the full report:.Dr Reddy's At One-Month High On Arm Buying British Nicotine Gum Brand.DISCLAIMERThis report is authored by an external party. NDTV Profit 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 NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Dr. Reddy's - Nicotinell Acquisition To Boost OTC Presence: ICICI Securities

Deal is likely to be EPS accretive

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