Dr Reddy's Lab rebounds 5% from intra-day's low

The stock moved higher by 2% to Rs 3,213, bouncing back 5% from intra-day's low of Rs 3,057 on NSE.

Dr Reddy’s Laboratories has moved higher by 2% to Rs 3,213, bouncing back 5% from intra-day’s low on the National Stock Exchange (NSE).

The stock hit a low of Rs 3,057 in early morning trade, after 6.4% yesterday’s fall, on fear that a crash of the Russian currency would hurt the exports of the company.

However, analyst at Angel Broking belives that it’s unlikely to have much impact on the profitability of the company, as the company derives only 15% of its sales (in FY2014) from the Russia and other markets in the region.

“The company had posted a dip of 13% from the region, on back of the same in 2QFY2015. Thus, in all possibility the 3QFY2015 numbers could be impacted on back on back of the same, however given that the movement has been very volatile and that the Russian government will take steps like hiking interest rates and others to safe guard their economy and thus we believe that the plunge could be arrested and should not impact the FY2016 numbers,” analyst said in a client note.

Moreover, the company is expected to post a robust growth on back of the new product launches in US (which constitutes around 45% of sales in FY2014), which will aid high profitability. Thus net-net we don’t expects the Ruble to have a great impact on the overall profitability of the company. Thus, we maintain our buy on the stock with an upgraded price target of Rs 3,935, it added.