Shares of Dr Reddy’s slipped 7 per cent in early commerce on May 11
Shares of Dr Reddy’s slipped 7 per cent in early commerce on May 11, a day after the corporate posted its Q4 outcomes
Shares of Dr Reddy’s Laboratories slipped 7 per cent in early commerce on May 11, a day after the corporate posted its Q4 outcomes. The drugmaker’s web revenue for the quarter jumped 10-fold to Rs 959.2 crore from Rs 87.5 crore in the identical interval final yr however nonetheless lagged the Street’s estimate of Rs 1,093.6 crore.
Its income from operations stood at Rs 5,843 crore in Q4 FY23, up 15.28% YoY as in opposition to Rs 5,068.4 crore in Q4 FY22. Meanwhile, whole bills had been down 4 per cent at Rs 5,132.2 crore in opposition to Rs 5,348.4 crore in Q4FY22.
Revenue got here in at Rs 6,296.8 crore, 15.81 per cent up from Rs 5,436.8 crore within the year-ago quarter. The topline beat the Street’s expectation of Rs 6,090.5 crore for the quarter underneath overview.
EBIDTA margin additionally expanded to 25.9 p.c in January-March from 23.9 per cent in the identical quarter final yr.
“Dr Reddys’ reported an all spherical miss vs our expectation as US revenues declined 17% QoQ and margin stood at 25 per cent. Management commentary reaffirmed development in US enterprise although we sense it could be tough to develop on a Revlimid base in FY25 and past,” YES Securities said.
What Should Investors Do Now?
Brokerages, however, don’t seem too impressed with the numbers as subdued performance of the core business and waning of gRevlimid’s disproportionately high contribution points towards pain.
Even though the management expects gRevlimid to continue contributing to its revenue in the coming quarters, brokerages do not share the optimism.
Nuvama Institutional Equities, said that given the contribution from gRevlimid was cut in half, Q4FY23 was a stronger reflection of the company’s main business than Q2/Q3. The pipeline for the company is strong, but the brokerage points out difficulties with important items like gCiprodex, where market share has dropped by roughly 1200 bp, and gVascepa, gKuvan, and gNuvaring, which have plateaued.
It predicted single digit organic growth despite successful launches like gRemodulin and gLexsican, at roughly USD950mn ex gRevlimid base.
The brokerage has downgraded the stock to ‘Reduce’ despite gRevlimid strength.
“We keep FY24/25E consolidated EPS unchanged, but cut core EPS (ex- gRevlimid) by about 12% given core business challenges. Our 300bp Q4FY23–FY25 core margin expansion captures upside potential. Our ₹4,200 target price (vs ₹4,675) is based on unchanged 22x FY25E EPS and ₹435 from gRevlimid; downgrade to ‘REDUCE/SU’,” stated the brokerage in its report.
Prabhudas Lilladher downgraded Dr Reddy’s to Reduce from Buy with a revised goal worth of Rs 4,500 from Rs 4,900.
“Dr Reddy’s Q4FY23 reported profitability was consistent with our estimate. Adjusted for one-time divestment revenue (Rs 2.65 billion), EBITDA was 20% under our estimates impacted by decrease GMs and better overheads. Our FY24E and FY25E EPS stands diminished by 10% and 6% as we think about decrease margins ex of gRevlimid,” it stated.
YES Securities downgraded Dr Reddy’s to Neutral with a target price of Rs 5,150.
“Dr Reddys’ reported an all round miss vs our expectation as US revenues declined 17% QoQ and margin stood at 25%. Management commentary reaffirmed growth in US business though we sense it may be difficult to grow on a Revlimid base in FY25 and beyond,” YES Securities stated.
Disclaimer:Disclaimer: The views and funding suggestions by specialists on this News18.com report are their very own and never these of the web site or its administration. Users are suggested to verify with licensed specialists earlier than taking any funding choices.
