Dr Reddy's: Brokerage reports by JM Financial, Motilal Oswal as stock up 4%

DRL's management has guided for double-digit growth in FY26, with margins expected to remain similar to FY25 levels. Here's what brokerages expect from the company going ahead

Dr Reddy’s stock price today Shares of Dr Reddy’s Laboratories (DRL) surged 4 per cent to ₹ 1,203.60 on the BSE in Monday’s intra-day trade amid heavy volumes after the company reported its March 2025 quarter earnings.  The stock bucked the overall trend in the pharma stocks on Monday. Nifty Pharma index lost 2 per cent in intra-day deals on reports that US President Donald Trump is planning to lower prescription drug prices by making sure Americans don't pay more than people in the cheapest countries. MORE DETAILS HERE

 

At 10:45 am; DRL stock was trading 3.9 per cent higher at ₹ 1,201.25, as compared to 1 per cent rise in the BSE Healthcare index. The average trading volumes on the counter jumped over two-fold. A combined 3.24 million equity shares have changed hands on the NSE and BSE.

 

Dr Reddy’s Q4 result

 

DRL posted a 22 per cent year-on-year (Y-o-Y) rise in consolidated profit after tax (PAT) for the fourth quarter of 2024-25 at ₹1,593.9 crore. The PAT beat enabled by higher Net Finance income and lower taxation due to reversal of tax provisions and the foreign currency translation reserve (FCTR) transfer being non-taxable.

 

Revenues for the period were up 20 per cent to ₹8,506 crore. The outperformance in topline is driven by significant jump in Europe because of Nicotine Replacement Therapy (NRT) acquisition, supported by contribution from generics portfolio. Earnings before interest, taxes, depreciation and amortisation (Ebitda) for the quarter was up 16.1 per cent at ₹2,050 crore. Ebitda margin dipped 80bp YoY to 24 per cent, due to lower gross margins and elevated SG&A. 

 

Dr. Redd's Laboratories posted healthy growth in revenue across the segments, partly aided by the addition of acquired businesses. In addition, pharmaceutical services and active ingredients saw a healthy revival in FY25 performance vs. the muted show in FY23/FY24.

 

Management has guided for double-digit growth in FY26, with margins expected to remain similar to FY25 levels. Beyond FY26, Semaglutide and Biosimilars (including Abatacept) are expected to drive business performance.

 

Brokerage view: JM Financial Institutional Securities

 

Analysts at JM Financial expect the DRL's FY26 topline to grow at 23 per cent with Ebitda margins to remain at similar levels as  seen in FY25. The brokerage firm has revised FY26E topline upwards by 8 per cent on account of expected Revlimid sales being greater than those earlier anticipated.  Beyond FY26, Semaglutide and Biosimilars (including Abatacept) are expected to drive business performance, JM Financial said in a recent note. DRL plans to be present in all Semaglutide markets losing exclusivity in CY26, while Abatacept is scheduled for launch in CY27. Analysts believe the markets are underestimating the Semaglutide opportunity for Dr. Reddy’s. While it may not fully replace Revlimid sales, it could substantially mitigate the earnings decline in FY27, the JM Financial note said.

 

Motilal Oswal Financial Services on Dr Reddy's Laboratories

 

After three years of strong 30 per cent earnings CAGR over FY21-24E, the company ended FY25 with a moderate 6 per cent earnings growth. DRL is implementing a plan to expand product offerings across markets and add/ build capacity to cater to the respective markets. Having said this, the intensified competitive pressures in the base portfolio would keep earnings growth in check.

 

About Dr. Reddy's

 

Dr. Reddy's Laboratories is a global pharmaceutical company headquartered in Hyderabad, India. The company offers a portfolio of products and services including APIs, generics, branded generics, biosimilars and OTC. The company’s major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. DRL’s major markets include - USA, India, Russia & CIS countries, China, Brazil, and Europe.