KR Choksey has given Buy recommendation for Dr. Reddy’s Laboratories with a target price of Rs. 5261 in its research report issued on May 23, 2022
KR Choksey’s research report on Dr. Reddy’s Laboratories
Dr. Reddy’s laboratories reported adj. revenue growth at 10.3% YoY (-1.5% QoQ) to INR 52.59 bn in Q4FY22. This was driven by 10.0% YoY (-0.7% QoQ) increase in revenue from operations to INR 50.68 bn, 26.6% YoY (-29.8% QoQ) decline in license fees and services income to INR 1.52 bn and a 4.3% YoY (+104.8% QoQ) decline in other operating revenue to INR 381.0 mn in Q4FY22 • EBITDA margins declined 168 bps YoY (-242.0 bps QoQ) to 20.4% in Q4FY22 • Excluding one-time incomes from sale of anti-bacterial brands Ciprolet and Levolet in Russia and Daffy bar and Combihale in India of INR 2.16 bn, litigation expenses of INR 983.0 mn and impairment expenses of INR 7.42 bn (Tepilamide Fumarate tablets etc.), the company witnessed its adjusted net profits grow at 29.0% YoY (+1.0% QoQ) to INR 7.21 bn in Q4FY22.
As such we maintain the target price of INR 5,261 on the shares of Dr. Reddy’s, with an upside potential of 23.1% from its CMP of INR 4,275/ share. Accordingly, we maintain our “BUY” rating on the shares of Dr. Reddy’s.