Accumulate Dr Reddys Laboratories; target of Rs 1350: Prabhudas Lilladher

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • Dr. Reddy's Laboratories (DRRD IN) reported Q2FY27 EBITDA of INR ~17bn with ~19.1% OPM, aided by INR1.5bn licensing/milestone income, lower R&D spend, and exclusivity opportunities in the US.
  • The company's US business is expected to benefit from new launches, including the first-to-market Sugammadex injection, and the re-launch of Semaglutide across key markets.
  • Domestic and Russia sales continue to be on strong footing, with growth supported by new launches, acquired brands, price increases, and favorable forex.
  • Biosimilars, including Rituximab and bAbatacept, are expected to be growth drivers, with the US commercial framework largely established and limited incremental selling costs expected.

Thesis Validation Checklist

  • Investors should watch for the sustainability of margins at ~20%, the successful re-launch of Semaglutide, and the progress of biosimilars, including bAbatacept, over the next ~12 months.
  • The company's ability to manage R&D spend, maintain exclusivity opportunities, and navigate regulatory processes will be key to margin recovery and growth.
  • Timely launches, such as bAbatacept, and the expansion of the company's pipeline across peptides, biosimilars, and GLP products will be important signals to validate the investment thesis.