Citigroup assigns 'hold' rating to Dr Reddy's Laboratories
Citigroup has assigned a ‘hold’rating to Dr Reddy’s Laboratories (DRL) with a price target of Rs 547.
By ET Bureau |
DR Reddy���s Laboratories
CMP: Rs 425.05
TARGET PRICE: Rs 547
Citigroup has assigned a ���hold���rating to Dr Reddy���s Laboratories (DRL) with a price target of Rs 547. ���The company has evolved a business model that is among the best placed to tackle the changing dynamics of the industry. Near-term growth drivers and investment for the longerterm sustainability of growth makes DRL one of the best Indian pharma companies,��� the Citigroup client note said. DRL���s presence in patent challenges and drug discovery implies the potential for positive surprises to earnings and valuations.
���However, our positive view is tempered by DRL being caught on the wrong foot with its acquisition of Betapharm in Germany, given significant changes in regulations and market dynamics. We value DRL at a 10% discount to sector leaders due to the near-term uncertainty on earnings and return ratios ��� especially on concerns in Germany,��� the note said. Although these concerns are not new, the impact on DRL���s earnings power appears to be much higher than what had originally anticipated, the note added.
CMP: Rs 425.05
TARGET PRICE: Rs 547
Citigroup has assigned a ���hold���rating to Dr Reddy���s Laboratories (DRL) with a price target of Rs 547. ���The company has evolved a business model that is among the best placed to tackle the changing dynamics of the industry. Near-term growth drivers and investment for the longerterm sustainability of growth makes DRL one of the best Indian pharma companies,��� the Citigroup client note said. DRL���s presence in patent challenges and drug discovery implies the potential for positive surprises to earnings and valuations.
���However, our positive view is tempered by DRL being caught on the wrong foot with its acquisition of Betapharm in Germany, given significant changes in regulations and market dynamics. We value DRL at a 10% discount to sector leaders due to the near-term uncertainty on earnings and return ratios ��� especially on concerns in Germany,��� the note said. Although these concerns are not new, the impact on DRL���s earnings power appears to be much higher than what had originally anticipated, the note added.
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