Dr. Reddy’s Q2 Results Review - Performance Inline With Expectations; Upgrade To 'Hold': Systematix

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..Systematix Research Report.Dr. Reddy’s Laboratories Ltd.'s Q2 FY25 revenue and Ebitda were largely in line with our estimates. Moderate outperformance in revenue was driven by growth in Dr. Reddy's generics business in North America (18% YOY) and India (18% YoY). India growth was led by contribution from inlicensed vaccine portfolio from Sanofi, new launches, and price increase. Excluding the inlicensed portfolio, India growth was close to 9%. Dr. Reddy's selling, general and administrative spend was also higher during the quarter (28.7% of sales) due to increased focus on India and emerging markets and one-time costs from Haleon Acquisition, diluting the impact of a strong topline growth in Ebitda. Research and development spend should remain elevated (8.5% to 9% of sales). Dr. Reddy's SG&A and R&D spend has increased almost 50% over the last two years as the company is in the early stages of its investment in the new growth platforms: consumer healthcare, biosimilars and CDMO. R&D spend it being targeted on biosimilars, new chemical entity oncology, and generics segments. We expect these new business avenues to take a few years before they start contributing profitably to the consolidated performance. However, currently these investments in new businesses are meaningfully diluting the reported earnings of the company. We revise our estimates on Dr. Reddy's and arrive at target price of Rs 1,414, based on 20 times H1 FY27E earnings per share. We upgrade the stock to Hold..Click on the attachment to read the full report:.Dr Reddy's Laboratories Q2 Results: Profit Falls 9%, Misses Estimates.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 Q2 Results Review - Performance Inline With Expectations; Upgrade To 'Hold': Systematix

The brokerage expects the new business avenues to take a few years before they start contributing profitably to the consolidated performance.

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