Dr. Reddy's Q1 Results Review - Limited Upside: Dolat Capital

Dolat Capital Report

Dr. Reddy's Laboratories Ltd.'s Q1 FY25 sales were slightly above our estimates, while Ebitda and profit after tax came in-line.

Selling, general and administrative expenses were slightly higher in Q1 FY25 on account of investment in new business initiatives, higher freight costs, and business integration costs. Management guided SG&A to be in the range of 27%-28% of sales and research and development range to be 8.5%-9.0% for FY25.

We upgrade our FY25E/FY26 EPS estimates by 6.9%/4.5% assuming higher than expected gRevlimid and India sales. Maintain ‘Reduce’ rating with revised SOTP-based target price of Rs 6,900 (earlier Rs 6,450) valuing at 25x times FY26E base EPS, plus a gRevlimid net present value of Rs 450/share.

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