Dr Reddy’s share price has risen 9.5% in the last five days. The stock rose after last week’s reported consolidated net profit fell 76% to Rs 88 crore and consolidated revenue from operations rose 15% year-on-year to Rs 5,437 crore. Brokerage stocks are bullish and existing products are seen to go upwards by up to 15% due to the healthy pace of launch and its higher performance across the main market supported by market share gains. “Controlled costs could improve operating leverage and drive even better profits in the next 2-3 years,” said analysts at Motilal Oswal Financial Services. Dr Reddy’s shares rose 1.4% to Rs 4,308 on the BSE today.
Stock Talk: Should You Buy Dr. Reddy’s Shares?
ICICI Securities: Buy
Target price: Rs 4,925; Upward: 15%
Analysts at ICICI Securities expect Dr. Reddy’s earnings and earnings CAGRs to be 10.3% and 29.0%, respectively, between FY22-FY24. The EBITDA margin could expand to 630bps driven by improvements in revenue mix and controlled SG&A spending, they said. “We have slightly modified our estimates for FY23-FY24E to factor in current quarterly performance and higher costs. We anticipate that the growth momentum in the branded generic business (India and EM) and new launches in the United States will support growth in the coming quarters. We believe the current assessment is interesting, ”said the brokerage. It maintains a revised target price of Rs 4,925 per share based on 22x FY24E EPS and an additional Rs237 for Revlimid and Rs 15 per share for NPV for Sputnik V vaccine.
Motilal Oswal: Buy
Target Price: Rs. 4,800, Upward: 13%
Analysts at brokerage firm Motilal Oswal Financial Services estimate that 23% revenue CAGR in FY22-24, led by 16% sales CAGR in NAM, 7% DF (Covid-19 sales adjustment), 15% in Europe, and PSAI- Supported by 13% as well as 260bp margin expansion. “We add DRRD’s base business EPS of Rs 192 to the 12M forward P / E multiple 24x and G-Revlimid offers NPV of Rs 210 per share,” they say. The brokerage maintains a ‘buy’ rating on the stock with a target price of Rs 4,800 based on a 12M forward earnings. The positive outlook is based on its limited-competitive product pipeline in the US market, strong core therapy in DF and attractive valuation of the stock.
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HDFC Securities: Buy
Target price: Rs 4,656; Upward: 9.6%
According to the technical analysis of HDFC Securities, Dr. Reddy’s recently corrected from the high of 5,615 tested in July 2021 and found support at the level of 3,668 in March 2022. Since then the stock has bounced back and reversed the recent short-term downward trend. Process “Technical indicators are giving a positive signal as the stock is now trading above the 50 day SMA. Daily momentum indicators such as the 14-day RSI have bounced back from the oversold level and are now in bullish mode. The intermediate technical setup looks positive, we believe the stock is likely to rise further in the coming weeks, ”analysts said. The brokerage recommends buying between Rs 4,020-4,125 with a target price of Rs 4,415 / 4,656, with a stop loss of Rs 3,900 over a period of one to three months.
(Stock recommendations in this story are from relevant research analysts and brokerage firms. Financial Express Online bears no liability for their investment advice. Capital market investments are subject to rules and regulations. Please consult your investment advisor before investing.)