Dr. Reddy's Labs Q3 Results Review - Yet Another Revlimid-Led Boost: Yes Securities

Yes Securities Report

Dr. Reddy's Laboratories Ltd. continues to benefit from Revlimid, potentially better traction in acquired Mayne Pharma portfolio amid a backdrop of benign pricing environment in U.S.

Management continues to hunt for assets as well as increase research and development (absolute + % of sales) to make use of Revlimid cash.

Biosimilar monetisation remains far out, beginning FY27 to make up for the likely loss of Revlimid sales in FY25 and FY26 compared to run rate in current fiscal.

Domestic business is expected to emerge from brand rationalization phase in Q4 and would clock double digit growth from next year. Near term prognosis is completely linked to Revlimid which would be keenly eyed as other peers (notably Aurobindo) are set to enter the market.

We tweak FY24/25 estimates and introduce FY26 forecasts but lower our rating to 'Reduce' based on an unchanged target price-to-earning of 19 times on FY25 earnings per share.

We lower Revlimid contribution beyond FY25 with a likely paucity of similar sized large product/s that can fill the void (reckon will open up in FY26).

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