Dr Reddy’s extends gains on strong Q2 results; brokerages maintain ‘buy’
The company’s other key regions Indian and Russian formulation businesses have grown by 12 per cent YoY and 14 per cent YoY respectively.
By ET Online | Updated:
NEW DELHI: Dr Reddy’s Laboratories Ltd surged over 3 per cent on Wednesday extending its previous day’s around 2 per cent gain, after the drug maker posted a top-line growth of 27 per cent to end the September quarter at Rs 2,880cr, in line with expectations.
At 11:35 am, Dr Reddy’s was trading 2.3 per cent higher at Rs 1763.30. It has hit a low of Rs 1732 and a high of Rs 1781 in trade today.
The top-line growth was driven by the US market, which grew by 47 per cent YoY. The company’s other key regions’ --- Indian and Russian -- formulation businesses have grown by 12 per cent YoY and 14 per cent YoY, respectively.
The drug maker reported a 32.37 per cent increase in its consolidated net profit to 407.44 crore for the second quarter ended September 30. The company had posted a net profit of 307.8 crore in the same quarter last fiscal.
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We have compiled views and recommendations from various brokerage firms on the Q2 results and stock performance:
Citi Research: Recommends ‘buy’ with a target price of Rs 2035
Citi recommends investors to ‘buy’ the stock as valuation looks attractive and places a target price of Rs 2035. According to the research firm, the company is among the best placed to capitalize on the multiple growth drivers for pharma over the next 3-4 years.
Citi expect the US (limited competition oppys, rising share in old products), India (sales force addition, new launches) and Russia (OTC push, fast growing market) to drive growth in the medium term, while biosimilars and the emerging markets deal with GSK contribute longer-term.
Kotak Institutional Equities: Maintains ‘add’ rating with a target price of Rs 1940
Strong sequential recovery in US along with the visibility of limited competition launches in 2HFY13E provides comfort on near-term growth. Margin expansion driven by operating leverage is also a key highlight for the quarter.
The brokerage firm believes the company remains on track to build a sustainable US business over the next 2-3 years along with scaling up business in branded generic markets.
Kotak maintains 'ADD' with increased target price of Rs1,940 from Rs1,810 earlier.
Angel Broking: Maintains ‘accumulate’ rating with a target price of Rs 1859
On the net profit front, the company posted an adjusted net profit of `493.7cr, i.e a growth of 76.8% over the corresponding period of the previous year. We recommend accumulate on the stock with a target price of Rs1859.
Other brokerage views:
Barclays and JPMorgan maintain ‘overweight’ rating on the stock with a target price of Rs 1991 and 1980, respectively.
Credit Suisse maintains a ‘neutral’ rating on the stock, but raises its target price from Rs 1810 earlier to Rs 1900.
Jefferies maintains ‘hold’ on the stock, but has raised its target price from Rs 1690 earlier to Rs 1760.
Nomura and BofA-ML maintain a ‘buy’ rating on the stock with a target price of Rs 1915 and 2130, respectively.
At 11:35 am, Dr Reddy’s was trading 2.3 per cent higher at Rs 1763.30. It has hit a low of Rs 1732 and a high of Rs 1781 in trade today.
The top-line growth was driven by the US market, which grew by 47 per cent YoY. The company’s other key regions’ --- Indian and Russian -- formulation businesses have grown by 12 per cent YoY and 14 per cent YoY, respectively.
The drug maker reported a 32.37 per cent increase in its consolidated net profit to 407.44 crore for the second quarter ended September 30. The company had posted a net profit of 307.8 crore in the same quarter last fiscal.
Check out our Facebook page for more market news
We have compiled views and recommendations from various brokerage firms on the Q2 results and stock performance:
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Citi Research: Recommends ‘buy’ with a target price of Rs 2035
Citi recommends investors to ‘buy’ the stock as valuation looks attractive and places a target price of Rs 2035. According to the research firm, the company is among the best placed to capitalize on the multiple growth drivers for pharma over the next 3-4 years.
Citi expect the US (limited competition oppys, rising share in old products), India (sales force addition, new launches) and Russia (OTC push, fast growing market) to drive growth in the medium term, while biosimilars and the emerging markets deal with GSK contribute longer-term.
Kotak Institutional Equities: Maintains ‘add’ rating with a target price of Rs 1940
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Strong sequential recovery in US along with the visibility of limited competition launches in 2HFY13E provides comfort on near-term growth. Margin expansion driven by operating leverage is also a key highlight for the quarter.
The brokerage firm believes the company remains on track to build a sustainable US business over the next 2-3 years along with scaling up business in branded generic markets.
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Kotak maintains 'ADD' with increased target price of Rs1,940 from Rs1,810 earlier.
Angel Broking: Maintains ‘accumulate’ rating with a target price of Rs 1859
On the net profit front, the company posted an adjusted net profit of `493.7cr, i.e a growth of 76.8% over the corresponding period of the previous year. We recommend accumulate on the stock with a target price of Rs1859.
Other brokerage views:
Barclays and JPMorgan maintain ‘overweight’ rating on the stock with a target price of Rs 1991 and 1980, respectively.
Credit Suisse maintains a ‘neutral’ rating on the stock, but raises its target price from Rs 1810 earlier to Rs 1900.
Jefferies maintains ‘hold’ on the stock, but has raised its target price from Rs 1690 earlier to Rs 1760.
Nomura and BofA-ML maintain a ‘buy’ rating on the stock with a target price of Rs 1915 and 2130, respectively.
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