Buy This Pharma Stock For +17% Return, In 1 Year: Motilal Oswal

The stock markets in India are under pressure at the moment, due to the Omicron concerns and inflationary worries. However, the pharma stocks are expected to grow this fiscal, according to brokerage firms. The brokerage firm Motilal Oswal has recommended investors to buy stocks of Dr. Reddy's Labs with a potential upside of +17%, within a target period of 1 year.

Target Price

The Current Market Price (CMP) of Dr. Reddy's Labs is Rs. 4670. The brokerage firm, Motilal Oswal has estimated a Target Price for the stock at Rs. 5470. Hence the stock is expected to give a +17% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 4670
Target Price	Rs. 5470
1 Year	17.00%

Company performance

DRRD's 2QFY22 revenues grew by 18% YoY to Rs. 57.6b. The growth was driven by the company's performance across geographies. Pharmaceutical Services and Active Ingredients (PSAI) segment's revenues declined 2% YoY to Rs. 8.4b (14% of sales). EBITDA margin contracted at a higher rate of 170 bp YoY to 23.2% on account of higher SGA expenses (up 240 bp YoY as % of sales), partially offset by lower R&D expense (down 120bp YoY as % of sales). EBITDA was up ~9% YoY to Rs. 13.4b, while Adjusted PAT grew 34% YoY to Rs. 9.9b.

Comments by Motilal Oswal

Maintaining a buy rating Motilal Oswal said, "We raise our EPS estimates by 4%/3% for FY22/23E to factor in a) faster growth in the Emerging Markets (EM), b) ramp-up in g-Vascepa, c) better prospects from China, and d) delay in Sputnik vaccine offtake due to commercial scale-up issues."

About the company

Dr. Reddy's Laboratories, a leading multinational pharmaceutical company based in India and overseas. Their products are available under a brand name, such as Omez (Omeprazole), Nise (Nimesulide), Ketorol (Ketorolac Thromethamine), Stamlo (Amlodipine Besylate), Razo (Rabeprazole), among many others

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.

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