The stock of Dr Reddy’s Laboratories surged about 3% in early trading on May 20, a day after the business reported its March quarter profits.
Dr Reddy’s reported a 76 percent drop in consolidated net profit to Rs 88 crore, much below analysts’ forecasts of Rs 677 crore, owing mostly to non-current asset impairment of Rs 751.5 crore.
The company’s consolidated revenues from operations increased 15% year over year to Rs 5,437 crore.
Dr Reddy’s said it reduced the value of tepilamide fumarate extended release pills by Rs 433 crore, the Shreveport cash generating unit by Rs 305 crore, and other intangible assets by Rs 17 crore during the quarter.
Here is what brokerages have to say about the stock and company after March quarter earnings:
Credit Suisse | Target Price: Rs 4465
Due to strong market expectations from the Revlimid possibility, the research company has maintained a neutral recommendation on the stock. The aim has been set at Rs 4,465.
According to Credit Suisse, although worries about future payer lawsuits for Revlimid generic persist, the positive launch momentum in the US will continue.
According to CNBC-TV18, the market is pricing in the continuation of low price erosion.
Morgan Stanley | Target Price: Rs 5202
The stock is still rated overweight by the firm, with a target price of Rs 5,202.
According to Morgan Stanley, the firm continues to generate granular growth across its businesses and continues to invest in complicated generics, biosimilars, and NCEs.
According to CNBC-TV18, the company aims for double-digit growth in India and developing economies.
Prabhudas Lilladher | Target Price: Rs 4900
“Revenues in the United States and India were strong. We foresee stable profits growth and a rise in the US generic sector, as well as cost reductions. In addition, a solid pipeline and fresh product releases will keep India and the rest of the globe growing steadily.
“We forecast a 13 percent compound annual rate of profits per share in FY22-24 (excluding Revlimid) and keep our estimations at ‘Buy’ with a revised target price of Rs 4,900.
“A significant risk to our call is a delay in important ANDA (abbreviated new drug application) approvals, as well as a protracted inflationary environment in raw material pricing.”
Sharekhan | Target Price: Rs 5500
“Strong growth prospects across the board, potential from vaccine exports, a strong product pipeline, and planned portfolio expansion in the US would likely allow the company to weather price difficulties and give adequate growth visibility in the US.
“A steady rebound in the PSAI category is also encouraging. The stock is now selling at 18.5/16.3 times FY23/FY24 profits per share.
“While short-term cost constraints may have an impact, long-term growth levers remain intact. We maintain our Buy rating on the company, with a price target of Rs 5,550 being intact.”
At 09:22 hrs Dr Reddy’s was quoting at Rs 4,037.20, up Rs 109.15 or 2.78 percent on the BSE.