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Analysts continue to bet on Dr Reddy's pinning hopes on gRevlimid

Analysts continue to bet on Dr Reddy's pinning hopes on gRevlimid

Analysts continue to bet on Dr Reddy's pinning hopes on gRevlimid
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By Hormaz Fatakia  Oct 31, 2022 10:11:54 AM IST (Updated)

Some analysts are pegging the contribution of gRevlimid to be between $150 million to $160 million.

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Most brokerages have maintained their positive stance on Dr Reddy's Laboratories after the company reported its highest-ever sales and operating profit in the September quarter.
Analysts are basing their bullish stance on the launch of Revlimid generic as the management expects it to have a meaningful contribution to earnings in the second half of the current financial year.
Some analysts are pegging the contribution to be between $150 million to $160 million.
The company's US sales stood at $344 million for the quarter, much higher than the estimated range of $255 million to $270 million.
Here are some of the key brokerages and their stance on the stock:
BrokerageRatingPrice Target (Rs.)Potential Upside (%)
Morgan StanleyOverweight5,09914.3
Motilal OswalBuy5,18016.2
DAM CapitalBuy4,93210.6
Macquarie believes that the company's September quarter results were better than expected. It termed the quarter as an all-round beat, where gRevlimid lived up to expectations.
Nomura says that Dr Reddy's is putting in place the foundation to diversify its presence in multiple markets. The brokerage further states that successful execution and clarity around its initiatives can drive the stock's valuation multiple higher in due course. It expects the increased rate of product filings in China to be a significant contributor to the earnings in the next 3-4 years.
Morgan Stanley believes that Dr Reddy's core business is stabilising and that the September quarter results were largely driven by Revlimid. However, it has warned that potential competition to Suboxone Generic is a key risk going forward.
Motilal Oswal has maintained its Earnings Per Share (EPS) estimates for Dr. Reddy's for the current and upcoming financial year to factor in the sales of gRevlimid, moderation in sales and profitability of the company's PSAI business and ongoing price erosion in the US generics base business. However, it remains positive on the company's ANDA pipeline and growth prospects in India.
Out of the 42 analysts that track Dr Reddy's, 35 of them have a buy recommendation on the stock. Out of the remaining seven, six have a hold rating while one has a sell call.
Shares of Dr Reddy's Laboratories are trading 2.4 percent higher as of 9:30 AM at Rs 4,562.20 and are among the top gainers on the Nifty 50 index.
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