Sharekhan has given Buy recommendation for Dr Reddy’s Laboratories with a target price of Rs. 5900 in its research report issued on Sep 06, 2021

Sharekhan’s research report on Dr Reddy’s Laboratories

Dr Reddy’s Laboratories Ltd (DRL) has entered in to a definitive agreement to sell its rights pertaining to an investigational cancer drug, resulting in cash in-flows of $40 mn, upon completion of deal. This would be followed by 2 milestone payments of $40mn and $70 mn. Focus on geographic expansion and OTC business to drive the India business growth. Opportunities from Covid products including vaccines to also add to the growth. A strong pipeline of new product launches in the US business to enable DRL reduce the impact of the price erosion and support growth.

Outlook

At the CMP the stock trades at 30.4x / 23.1x its FY22E / FY23E EPS. Basis the positives we re-iterate Buy recommendation on the stock with an unchanged PT of Rs 5900.

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