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Dr. Reddy's Laboratories Ltd.
(DRREDDY)
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Rating:61Neutral
Price Target:
₹1,216.00
▲(3.24% Upside)
Action:Reiterated
Date:07/26/26
Overall score reflects solid underlying fundamentals and balance-sheet strength, tempered by weakened cash-flow conversion and softer TTM growth/margins. Technicals are notably bearish (below key moving averages with negative MACD), while valuation offers limited support (P/E ~29, low yield). Earnings-call guidance points to a potential second-half recovery, but near-term disruptions and execution risks keep the setup moderate rather than strong.
Positive Factors
Balance-sheet strength
A low debt-to-equity (~0.24) and described conservative balance sheet provide durable financial flexibility. This supports sustained R&D and CapEx for peptides/biosimilars, enables hedging and opportunistic M&A, and reduces refinancing risk through 2–6 months and beyond.
Negative Factors
Weakened cash conversion
A marked drop in free cash flow and low cash conversion (FCF ~43% of net income, TTM FCF down ~38%) reduces internal funding for CapEx and R&D and limits flexibility for acquisitions or remedial spending. This weakens liquidity resilience despite a net cash surplus.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance-sheet strength
A low debt-to-equity (~0.24) and described conservative balance sheet provide durable financial flexibility. This supports sustained R&D and CapEx for peptides/biosimilars, enables hedging and opportunistic M&A, and reduces refinancing risk through 2–6 months and beyond.
Read all positive factors
Dr. Reddy's Laboratories Ltd. (DRREDDY) vs. iShares MSCI India ETF (INDA)
Market Cap
₹962.74B
Dividend Yield0.7%
Average Volume (3M)96.37K
Price to Earnings (P/E)29.0
Beta (1Y)0.45
Revenue Growth-0.92%
EPS Growth-41.75%
CountryIN
Employees27,527
SectorGeneral
Sector StrengthN/A
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)39.72
Shares Outstanding834,636,800
10 Day Avg. Volume104,627
30 Day Avg. Volume96,369
Financial Highlights & Ratios
PEG Ratio-1.01
Price to Book (P/B)2.77
Price to Sales (P/S)3.11
P/FCF Ratio34.24
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)42.99
Revenue Forecast (FY)₹350.88B
Dr. Reddy's Laboratories Ltd. Business Overview & Revenue Model
Company Description
Established in 1984 and headquartered in Hyderabad, India, Dr. Reddy's Laboratories Limited functions as a fully integrated global pharmaceutical entity. Its business is structured into several core divisions. The Global Generics segment is respon...
How the Company Makes Money
Dr. Reddy's makes money primarily by selling pharmaceutical products and related services across domestic and international markets. The largest revenue stream typically comes from finished dosage formulations (FDFs), where the company manufacture...
Dr. Reddy's Laboratories Ltd. Earnings Call Summary
Earnings Call Date:Jul 22, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Oct 23, 2026
Earnings Call Sentiment Neutral
The call presents a balanced picture: the company continues to show strong underlying organic growth across India and emerging markets, successful complex generics launches, a solid balance sheet and a clear pipeline (including abatacept). However, near-term headline performance was materially affected by the loss of lenalidomide revenue and a semaglutide API-related disruption that led to a INR 240 crore provision, substantial margin compression and some execution risks (biologics Form 483, freight/solvent inflation). Management expects recovery (semaglutide resumption by November and high‑teens to ~20% EBITDA ex-sema) and reiterated strategic priorities, but the quarter’s one‑offs and market exposures keep the outlook mixed.Positive Updates
Revenue and Sequential Recovery
Consolidated revenue of INR 8,071 crores ($853M); -5.6% year-over-year but +7.4% sequentially, indicating quarter-on-quarter recovery momentum.
Negative Updates
Year-on-Year Revenue and Margin Pressure
Consolidated revenue declined 5.6% YoY and consolidated gross profit margin compressed by 1,039 basis points YoY to 46.5%; EBITDA margin fell 1,416 basis points YoY to 12.5%.
Read all updates
Q1-2027 Updates
Positive
Negative
Revenue and Sequential Recovery
Consolidated revenue of INR 8,071 crores ($853M); -5.6% year-over-year but +7.4% sequentially, indicating quarter-on-quarter recovery momentum.
Read all positive updates
Company Guidance
Management reiterated forward-looking targets to drive margin recovery and growth, saying they expect to reach roughly 20% EBITDA excluding semaglutide (this quarter’s reported EBITDA was INR 1,009 crore/$107M or 12.5%, and excluding the semaglutide API provision the margin was 15.4% and ~18% on an adjusted basis), and forecast a strong second half supported by resumption of semaglutide supplies by November (180,000 pens sold to date; targeting 6–7 million pens between Nov–Mar and estimating ~3–4 million pens of lost opportunity this quarter), continued double‑digit underlying base‑business growth across key geographies, full‑year CapEx of ~INR 1,800 crore, R&D of ~7–8% of revenues, a normalized effective tax rate of ~24–25%, and availability of a net cash surplus of INR 3,057 crore ($323M) for inorganic opportunities; management also flagged abatacept’s U.S. BLA goal date in December (biologics ≈2% of sales), an 80–90% probability of resolving the semaglutide API issue, and noted existing hedges of $354M (at INR 92.34–94.63) and RUB 2.8B (at 1.26).Dr. Reddy's Laboratories Ltd. Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
83
Very Positive
Cash Flow
62
Positive
| Breakdown | TTM | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 331.19B | 335.93B | 325.54B | 279.16B | 245.88B | 214.39B |
| Gross Profit | 166.18B | 177.26B | 190.43B | 163.61B | 139.34B | 113.84B |
| EBITDA | 66.67B | 79.16B | 88.84B | 79.29B | 66.05B | 47.74B |
| Net Income | 33.11B | 42.85B | 56.54B | 55.68B | 45.07B | 23.57B |
Balance Sheet | ||||||
| Total Assets | 575.30B | 579.35B | 492.99B | 387.52B | 322.85B | 296.65B |
| Cash, Cash Equivalents and Short-Term Investments | 81.43B | 87.81B | 57.91B | 81.47B | 61.80B | 44.37B |
| Total Debt | 71.95B | 89.54B | 46.77B | 20.02B | 13.47B | 33.84B |
| Total Liabilities | 188.57B | 198.89B | 155.82B | 106.97B | 89.99B | 106.13B |
| Stockholders Equity | 383.43B | 377.06B | 333.39B | 280.55B | 230.99B | 190.53B |
Cash Flow | ||||||
| Free Cash Flow | 14.71B | 30.51B | 18.92B | 18.00B | 40.01B | 9.06B |
| Operating Cash Flow | 39.78B | 53.84B | 46.43B | 45.43B | 58.87B | 28.11B |
| Investing Cash Flow | -43.25B | -67.03B | -51.02B | -40.28B | -41.37B | -26.39B |
| Financing Cash Flow | 4.55B | 12.73B | 11.86B | -3.76B | -26.86B | -2.42B |
Dr. Reddy's Laboratories Ltd. Technical Analysis
Negative
1177.80
Price Trends
1206.61
Negative
1246.09
Negative
1246.85
Negative
Market Momentum
-12.10
Positive
35.98
Neutral
1.55
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:DRREDDY, the sentiment is Negative. The current price of 1177.8 is below the 20-day moving average (MA) of 1179.38, below the 50-day MA of 1206.61, and below the 200-day MA of 1246.85, indicating a bearish trend. The MACD of -12.10 indicates Positive momentum. The RSI at 35.98 is Neutral, neither overbought nor oversold. The STOCH value of 1.55 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IN:DRREDDY.
Dr. Reddy's Laboratories Ltd. Risk Analysis
Dr. Reddy's Laboratories Ltd. disclosed 60 risk factors in its most recent earnings report. Dr. Reddy's Laboratories Ltd. reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Dr. Reddy's Laboratories Ltd. Peers Comparison
UnderperformOutperform
Sector (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | ₹965.29B | 17.44 | ― | 0.85% | 28.19% | 49.25% | |
70 Outperform | ₹1.12T | 24.96 | ― | 0.09% | 21.11% | -1.28% | |
64 Neutral | ₹951.27B | 25.83 | ― | 0.24% | 9.09% | 9.61% | |
64 Neutral | ₹4.56T | 37.67 | ― | 0.84% | 11.41% | 16.62% | |
61 Neutral | ₹962.74B | 28.98 | ― | 0.70% | -0.92% | -41.75% | |
59 Neutral | ₹1.84T | 75.37 | ― | 0.30% | 32.85% | 8.94% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% |
* General Sector Average
IN:DRREDDY
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Dr. Reddy's Laboratories Ltd. Corporate Events
Dr. Reddy’s Publishes Q1 FY27 Earnings Call Transcript for Investors
Jul 28, 2026
Dr. Reddy’s Laboratories Ltd., a Hyderabad-based global pharmaceutical manufacturer of generics and branded medicines, maintains a broad market presence through listings on Indian exchanges and the New York Stock Exchange, underscoring its r...
Dr. Reddy’s Sets July 2026 AGM to Approve Accounts, Dividend and New Auditor
Jun 30, 2026
Dr. Reddy’s Laboratories has scheduled its 42nd Annual General Meeting for July 23, 2026, to be held via video conferencing and other audio-visual means, with remote e-voting available to shareholders ahead of the meeting. The AGM agenda inc...
Dr. Reddy’s Releases FY 2025-26 Business Responsibility and Sustainability Report
Jun 30, 2026
Dr. Reddy’s Laboratories has released its Business Responsibility and Sustainability Report for the financial year 2025-26 in line with Indian securities listing regulations. The report is presented as an integral component of the company...
Dr. Reddy’s Gets Seven USFDA Observations After Biologics Plant Inspection
Jun 25, 2026
Dr. Reddy’s Laboratories said the U.S. Food and Drug Administration has completed a pre-license inspection of its biologics manufacturing facility at Bachupally in Hyderabad, conducted between June 16 and June 25, 2026. The visit, linked to ...
Dr. Reddy’s to Engage Global Investors at London Conference in June 2026
Jun 10, 2026
Dr. Reddy’s Laboratories has informed stock exchanges that its management will participate in an Investec-hosted investor conference in London from June 16 to 17, 2026. The in-person group meetings, scheduled between 09:00 and 17:00 BST, are...
Dr. Reddy’s Issues New Equity Shares on Employee Stock Option Exercise
Jun 5, 2026
Dr. Reddy’s Laboratories has allotted 12,100 fully paid equity shares of face value Re. 1 each to eligible employees following the exercise of stock options under its 2002 Employee Stock Option Scheme and 2007 ADR Stock Option Scheme. The ne...
Dr. Reddy’s Schedules Investor Meet with Bank of America in Hyderabad
Jun 1, 2026
Dr. Reddy’s Laboratories has informed stock exchanges that its management will participate in an investor conference organized by Bank of America in Hyderabad on June 5, 2026. The in-person group meeting with analysts and institutional inves...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.