Dr Reddy’s Lab share prices fell 5.5% to a low of Rs 1,218 as soon as the scrip started trading on the National Stock Exchanges on January 24. The dip in the share price of Dr Reddy’s Lab came after the brokerage houses cut target prices on weak quarterly performance in the US and India along with rising competition in key products.
On January 23, Dr Reddy’s Lab reported its quarterly results for Q3 FY25 and its net profit came in at Rs 1,413.30 crore, compared with Rs 1,379 crore in the correspondent quarter of FY24. The company’s revenue from operations grew 15.9% to Rs 8,358.6 crore as against Rs 7,215 crore in the year-ago period.
Nuvama cuts target price
The brokerage house has maintained its ‘Buy’ rating on the stock. However, it slashed the target price to Rs 1,533 from Rs 1,553. The reason behind this cut was the sequential dip in US revenue due to rising competition in key products. Plus, this reporting quarter marks the consolidation of the nicotine replacement therapy (NRT) business. Dr Reddy acquired the NRT brands from Haleon in September 2024. The company utilised the higher cash flow from gRevlimid to increase spending on R&D and SG&A. However, it finds the current valuation attractive, while key product approval remains critical.
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The brokerage firm, Jefferies, has kept the ‘Underperform’ rating unchanged. However, it cut the target price to Rs 1,170 from Rs 1,210. It also gave the same reason that there’s a rise in competition in its key products, due to which the company is bearing higher selling expenses. The sales performance in the US and core India weighed down, although, it showed strong performance in the Russian and UK markets. Jefferies cut the earnings per share estimates for FY26 by 3% and FY27 by 6%.
Dr Reddy’s Lab in Q2
The company reported a 15% drop in its consolidated net profit at Rs 1,255 crore in Q2 FY24, compared to Rs 1,480 crore in the same quarter a year ago.
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