Dr Reddy's rallies 4%; market cap touches Rs 1 trillion post Q3 results

With this, Dr Reddy's has become the third listed pharmaceutical company to achieve the Rs 1-trillion m-cap feat

Shares of Dr Reddy's Laboratories hit a record high of Rs 6,077.95 as they rallied 4 per cent on the BSE in Wednesday's intraday trade after it reported an 11 per cent rise in its consolidated net profit at Rs 1,379 crore for the third quarter ended December 2023 (Q3FY24), driven by higher market share in existing products in North America and growth in Europe. 

The pharmaceutical company had posted a net profit of Rs 1,247 crore in the year-ago quarter.

Consolidated revenue grew 7 per cent year-on-year (Y-o-Y) to Rs 7,215 crore from Rs 6,880 crore in Q3FY23. Reported earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin improved to 29.3 per cent from 29.0 per cent.

The management said the company delivered another quarter of highest-ever sales and robust financial performance aided by new products performance and base business market share gain in the US, new products launch momentum, and strong performance in Europe. The company continued to strengthen its core businesses and invest in innovative products in strategic collaboration for novel molecules to meet unmet needs of patients.

On the bourses, the stock has surpassed its previous high of Rs 5,986.20 touched on August 24, 2023. With this, Dr Reddy's has seen its market capitalisation (market cap) touching Rs 1 trillion-mark for the first time, and becoming the third listed pharmaceutical company to achieve this feat. 

Dr Reddy's, with an m-cap of Rs 1.01 trillion, stands behind Sun Pharmaceutical Industries (Rs 3.34 trillion), and Cipla (Rs 1.08 trillion).

"Dr Reddy’s delivered a largely steady Q3FY24 performance with slower-than-expected traction in branded markets of India, Russia and CIS driving a marginal Ebitda miss. While the prevailing US generics tailwinds provide near-term stability, absence of any meaningful approvals for Dr Reddy's in addition to the regulatory overhang over the Bachupally facility remains a concern," analysts at Kotak Securities said.

Besides, according to Motilal Oswal Financial Services, Dr Reddy's delivered a marginally better-than-expected performance for the quarter led by healthy traction in the North America (NA) and Pharmaceutical Services & Active Ingredients (PSAI) segments. "The India business has been witnessing moderation in YoY growth for three quarters now. Dr Reddy's continues to invest on its product pipeline, and marketing initiatives across key markets. The benefits are expected from FY25 onwards," the brokerage firm said in its result update.

Analysts at JM Financial Institutional Securities, too, said they continue to believe that Dr Reddy’s strong compliance, prudent capital allocation and diversified geographic mix with a thrust on India and US will continue to create value. The brokerage firm has assumed coverage with 'BUY' and a December 2024 target price of Rs 6,585 (including gRevlimid option value of Rs 410).