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Dr. Reddy's Laboratories Ltd (RDY)
NYSE:RDY
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Dr Reddy's Laboratories
(NYSE:RDY)
70Outperform
Dr Reddy's Laboratories (RDY) vs. S&P 500 (SPY)
Market Cap
$11.16B
Dividend Yield0.61%
Average Volume (3M)1.91M
Price to Earnings (P/E)17.2
Beta (1Y)0.29
Revenue Growth13.26%
EPS Growth1.33%
CountryUS
Employees27,048
SectorHealthcare
Sector Strength72
IndustryDrug Manufacturers - Specialty & Generic
Share Statistics
EPS (TTM)0.77
Shares Outstanding834,416,300
10 Day Avg. Volume2,327,732
30 Day Avg. Volume1,910,217
Financial Highlights & Ratios
PEG Ratio12.90
Price to Book (P/B)N/A
Price to Sales (P/S)3.57
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.20Price Target Upside37.98% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Dr Reddy's Laboratories Business Overview & Revenue Model
Company DescriptionDr. Reddy's Laboratories Ltd. is a global pharmaceutical company headquartered in Hyderabad, India. The company operates in the healthcare sector, focusing on the development and manufacture of a broad range of pharmaceutical products. Dr. Reddy's core offerings include generic medications, active pharmaceutical ingredients (APIs), biosimilars, and proprietary products. The company aims to provide affordable and innovative medicines for patients worldwide, with a presence in over 20 countries.
How the Company Makes MoneyDr. Reddy's Laboratories generates revenue primarily through the sale of generic drugs, which are cost-effective versions of branded medications that become available after the original patents expire. The company also earns money by manufacturing and selling active pharmaceutical ingredients (APIs) to other pharmaceutical companies. Additionally, Dr. Reddy's invests in research and development to create biosimilars—biological products highly similar to already approved reference products—to expand its product portfolio. The company's proprietary products, which include differentiated formulations and novel drug delivery systems, contribute to its revenue streams. Strategic partnerships and collaborations with other pharmaceutical companies and research institutions further enhance Dr. Reddy's market reach and product offerings, playing a significant role in its financial performance.
Dr Reddy's Laboratories Financial Statement Overview
Summary
Dr Reddy's Laboratories demonstrates strong financial health with impressive revenue growth and profitability metrics. The balance sheet is solid, with low leverage and high equity ratios, ensuring financial stability. However, there is room for improvement in cash flow management, particularly in enhancing free cash flow generation relative to net income.Income Statement
Dr Reddy's Laboratories shows strong revenue growth with a 11.51% increase in TTM compared to the previous annual period. The gross profit margin stands at 59.32%, and the net profit margin is a healthy 17.24% for the TTM, indicating efficient cost management and profitability. EBIT and EBITDA margins are strong at 22.15% and 28.40% respectively, reflecting operational efficiency.85
Very Positive
Balance Sheet
The company maintains a solid equity base, as evidenced by a debt-to-equity ratio of 0.16, indicating low financial leverage. Return on equity (ROE) for the TTM is robust at 16.89%, suggesting effective use of equity capital to generate profits. The equity ratio stands at 66.03%, highlighting financial stability and a strong balance sheet.78
Positive
Cash Flow
Free cash flow has decreased from previous periods, with a notable drop in free cash flow growth rate. The operating cash flow to net income ratio is 0.67, indicating that net income is well-supported by operating cash flows, although this has declined compared to previous years. Free cash flow to net income ratio is 0.12, showing room for improvement in cash generation relative to earnings.70
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 311.31B | 279.16B | 245.88B | 214.39B | 189.72B | 174.60B | Gross Profit |
| 184.65B | 163.61B | 202.97B | 113.84B | 103.08B | 94.01B | EBIT |
| 68.98B | 67.73B | 96.28B | 40.82B | 36.06B | 37.05B | EBITDA |
| 88.43B | 88.42B | 74.43B | 47.74B | 45.71B | 41.78B | Net Income Common Stockholders |
| 53.68B | 55.68B | 45.07B | 23.57B | 17.24B | 19.50B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 10.76B | 81.47B | 66.75B | 44.37B | 34.57B | 25.74B | Total Assets |
| 80.33B | 387.52B | 322.85B | 296.65B | 265.49B | 232.24B | Total Debt |
| 14.70B | 20.02B | 13.47B | 33.84B | 30.31B | 22.10B | Net Debt |
| 8.11B | 12.91B | 7.69B | 18.99B | 15.48B | 20.05B | Total Liabilities |
| 37.41B | 106.97B | 89.99B | 106.13B | 90.51B | 77.25B | Stockholders Equity |
| 42.91B | 280.55B | 232.86B | 190.53B | 174.98B | 154.99B |
| Cash Flow | Free Cash Flow | ||||
| 6.52B | 18.00B | 40.01B | 9.06B | 23.14B | 23.73B | Operating Cash Flow |
| 35.95B | 45.43B | 58.87B | 28.11B | 35.70B | 29.84B | Investing Cash Flow |
| -56.13B | -40.28B | -41.37B | -26.39B | -22.66B | -4.92B | Financing Cash Flow |
| 25.75B | -3.76B | -26.86B | -2.42B | -298.00M | -25.16B |
Dr Reddy's Laboratories Technical Analysis
Negative
13.19
Price Trends
13.47
Negative
14.15
Negative
14.95
Negative
Market Momentum
-0.02
Negative
46.42
Neutral
12.76
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDY, the sentiment is Negative. The current price of 13.19 is above the 20-day moving average (MA) of 13.12, below the 50-day MA of 13.47, and below the 200-day MA of 14.95, indicating a neutral trend. The MACD of -0.02 indicates Negative momentum. The RSI at 46.42 is Neutral, neither overbought nor oversold. The STOCH value of 12.76 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RDY.
Dr Reddy's Laboratories Risk Analysis
Dr Reddy's Laboratories disclosed 60 risk factors in its most recent earnings report. Dr Reddy's Laboratories reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Dr Reddy's Laboratories Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $137.25B | 23.23 | 7.34% | 2.65% | -4.57% | 2.96% | |
75 Outperform | $164.90B | 40.60 | 67.55% | 2.97% | 18.64% | -39.39% | |
70 Outperform | $11.16B | 17.15 | 18.51% | 0.61% | 13.26% | 1.33% | |
69 Neutral | $779.73B | 70.22 | 84.84% | 0.66% | 32.00% | 102.18% | |
68 Neutral | $142.98B | 17.89 | 9.05% | 6.70% | 8.77% | 272.80% | |
50 Neutral | $17.79B | ― | -25.44% | ― | 4.34% | -206.85% | |
49 Neutral | $6.85B | 0.81 | -52.91% | 2.50% | 17.48% | 1.17% |
* Healthcare Sector Average
Performance Comparison
RDY
Dr Reddy's Laboratories
13.19
-1.53
-10.39%
AMGN
Amgen
311.55
36.88
13.43%
LLY
Eli Lilly & Co
825.91
70.27
9.30%
PFE
Pfizer
25.34
-0.74
-2.84%
SNY
Sanofi
55.46
8.60
18.35%
TEVA
Teva Pharmaceutical
15.37
1.46
10.50%
Dr Reddy's Laboratories Earnings Call Summary
Earnings Call Date: Jan 23, 2025 | % Change Since: -12.59% | Next Earnings Date: May 9, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance with record revenue and EBITDA, significant growth in the European market, progress in biosimilars, and sustainability accolades. However, there were challenges in the U.S. generics market, regulatory issues in Hyderabad, and a sequential decline in the India business.Highlights
Record Quarterly Revenue and EBITDA
Dr. Reddy's Laboratories achieved its highest ever quarterly revenue and EBITDA in Q3 FY '25, driven by a 16% year-on-year revenue growth to INR 8,359 crores (USD 977 million) and the inclusion of the Nicotine Replacement Therapy business.
Strong Growth in Europe
The European Generics business, including NRT, recorded USD 134 million in revenue, a 142% year-over-year increase. Excluding NRT, the growth was 22% YoY.
Significant Progress in Biosimilars
Dr. Reddy's secured marketing authorization for rituximab in the U.K. and filed denosumab in both the U.S. and Europe, marking progress in their biosimilars journey.
Sustainability and ESG Recognition
Dr. Reddy's achieved an ESG score of 79 out of 100, placing them fifth globally among pharma companies in the S&P Global CSA. They continue to be members of the DJSI World Index and have an upgraded MSCI ESG rating of A.
Lowlights
Challenges in U.S. Generics Market
The North America generics business revenue was flat year-on-year at USD 401 million, with a sequential decline of 10% due to price erosion and lower sales from certain products, including lenalidomide.
Regulatory Setback at Hyderabad Facility
The U.S. FDA issued a Form 483 with seven observations following a GMP inspection at Dr. Reddy's facility in Hyderabad, which the company needs to address.
Decline in India Business Sequentially
India business revenue declined 4% sequentially with slower growth in cardiac and gastrointestinal segments, which the company is addressing.
Company Guidance
In the Q3 FY '25 earnings call for Dr. Reddy's Laboratories, the company reported a robust financial performance, marked by a 16% year-on-year revenue growth to INR 8,359 crores (USD 977 million) and a 27.5% EBITDA margin. The newly acquired Nicotine Replacement Therapy (NRT) business contributed INR 605 crores to the revenue. Excluding NRT, the underlying growth was 7.5% year-on-year. The gross profit margin stood at 59%, with significant contributions from Global Generics and PSAI segments at 61.3% and 28.6%, respectively. The SG&A expenses rose by 19% year-over-year to INR 2,412 crores, driven by the NRT acquisition and increased logistics costs. The R&D expenditure was INR 666 crores, representing 8% of sales, with a focus on complex generics and biosimilars. The company anticipates maintaining an R&D spend of 8.5% to 9% of sales for the full fiscal year. Profit before tax was INR 1,874 crores, with an effective tax rate of 25.1%. The company reported an EPS of INR 16.94, reflecting a 13% quarter-on-quarter growth in profit after tax.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.