Neutral Dr. Reddy's Laboratories, target Rs 3070: Credit Suisse

Credit Suisse maintains a neutral rating on Dr Reddy's Laboratories with a 12-month target price of Rs 3070. The new formulation plants in Srikakulam, Vizag are operating at low utilisation which is a concern.

Given low utilisation, incremental capex should be low, cautions the global investment bank. The near-term capex should stay high at $200mn due to setting up new capacity.

In India, company expects 4-6% hit to revenue from NLEM pricing and FDC ban. Lower returns are driven by higher R&D and lower asset turns.