Dr Reddy’s share price jumped almost 4% during Wednesday’s trading session after Nuvama Institutional Equities, a brokerage firm, raised its rating on the stock from ‘Reduce’ to ‘Buy,’ setting a target price of ₹1,553. The brokerage is optimistic about the pharmaceutical company’s proactive strategies to lessen the effects of the patent expiration for its blockbuster drug Revlimid in 2026.
The brokerage noted that the expiration of the Revlimid patent in 2026 presents a considerable risk to Dr Reddy’s earnings growth, as the medication accounts for approximately 40% of its FY24 EBITDA. The company is addressing this issue, and we can see that management has outlined strategies to lessen the effects of the Revlimid loss.
“Dr Reddy’s has prepared itself rather well for the Revlimid expiry via several initiatives, which should help it fend off about 80% of the expiry fallout on EBITDA. We have now incorporated its key products in our current forecasts and are raising FY27E earnings by 15%. We value the stock at 24x FY27E EPS, yielding a TP of ₹1,553/share. A favourable risk-reward forces our hand to upgrade Dr Reddy to ‘BUY’ (from ‘REDUCE’),” said the brokerage.
Dr Reddy’s share price today
On Wednesday, Dr Reddy’s share price opened at ₹1,370.90 apiece on the BSE, the stock touched an intraday high of ₹1,404.60 per share and an intraday low of ₹1,361.55 apiece.
Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, said that Dr Reddy’s share prices witnessed a sharp move during the opening hour as, after a gap up, prices went on to test beyond 1,400 levels. However, prices have erased some of the morning gains but still maintain the positive tone. Considering the higher top, higher bottom structure, we maintain a positive bias, with 1,420-1,450 as immediate resistance and 1,340 as strong support.
Q2 Results
Dr Reddy’s reported a 9.35% decrease in its consolidated net profit, amounting to ₹1,341.5 crore for the quarter ending September 2024. The pharmaceutical giant had recorded a net profit of ₹1,480 crore during the same period last year, as stated in a regulatory filing from the Hyderabad-based company. Nevertheless, its revenue grew by 16.51% to ₹8,016.2 crore in the September quarter, compared to ₹6,880.2 crore in the previous year’s quarter.
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