Dr Reddy’s Share: Should you buy the pharma stock as Q3 net profit jumps 77%?

brokerage is on Shares of Dr Reddy’s Post third quarter results –

“Dr. Reddy’s offers long-term potential with several complex molecules in its pipeline and potential China opportunity. However, ex-Revlimid US development will face performance challenges due to price erosion and competition in existing molecules. We continue to focus on biosimilar R&D efforts.” Watch, but cautious on its long-term potential. We raise our consolation. FY24E/25E EPS 13%/12% higher than expected due to gRevlimid, but keep core EPS unchanged. With target price of ‘ keep hold 4,675,” Edelweiss said.

“Dr Reddy’s reported a strong Q2 result beating our and consensus estimates led by higher than expected sales from gRevlimid. Total revenue was driven by gRevlimid. Adjusted gross margin at 58.6% supported by gRevlimid which led to healthy adj. EBITDA margin of 29.7% year over year. We believe ex-gRevlimid, core EBITDA margin was approximately 21-22%. We expect normalized EBITDA margin (~25%) driven by new launches, ramp up in the US -up and supported by steady growth in India EM. We maintain Buy with revised target price of 4,880,” said brokerage Centrum.

“Despite recent sub-par core business performance, DRL’s near- to medium-term outlook remains consistent with guidance of 30 new launches in the US (and no major regulatory impasse), strong growth outlook in India (aided by recent deals), PSAI Driven to improve. and continued growth in RoW formulations. This will be supported by strong gRevlimid contribution expected over FY23-FY26E. Free cash flow backed by a strong balance sheet and willingness to make acquisitions is another trigger. Buy* Hold with a target price of 4,825,” according to DAM Capital.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.