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Buy This Large-Cap Pharma Stock For 14% Upside, Gave 62% Return In 5 Years

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Leading brokerage firm Prabhudas Lilladher has recommended investors to buy the stock of Dr. Reddy's Laboratories (DRRD) for a potential upside of 14%. DRRD has robust pipeline of 175 products with 90 filed, out of which 40% are injectables/sterile products. Filings for complex products will continue to focus on +25 products across Drug-device combos, peptides and long-acting Injectables.

 

Dr. Reddy's Stock Outlook

Dr. Reddy's Stock Outlook

The current market price of the stock is Rs 4309 apiece and the 52-week high is Rs 5614 apiece while 52-week low is Rs 3654 apiece. The stock has given a return of 64.22% in 5 years. If you buy the stock at its current market price it can potentially give you a return of 13.72% with a target price of Rs 4900.

Current Market PriceRs 4309
Target PriceRs 4900
Potential Gain13.72%
52-Week HighRs 5614
52-Week LowRs 3654
5-Year Return13.72%
Dr. Reddy's Laboratories Strategy for next 3-5 years
 

Dr. Reddy's Laboratories Strategy for next 3-5 years

Dr Reddy's (DRRD) management outlined its strategy to create new (Horizon 2) business models, while growing in existing spaces (Horizon 1) to drive sustainable growth. The company expects double digit revenue growth in the medium term, with aspiration of +25% OPM and 25% RoCE. Horzion 2 will focus on biosimilars, nutraceuticals, Immuno-oncology and new disease management. Most of these initiatives from financials perspective will be visible over next 3-5 years.

Dr. Reddy's Laboratories New growth avenues

Dr. Reddy's Laboratories New growth avenues

Company is planning to build its Immuno-oncology in NCEs, Biologics & CGT, Nutraceuticals, CDMO, new disease management and digital services which will start contributing meaningfully from 2027. We believe, investments in these avenues will lead to overall 50-100bps increase of expenses.

Dr. Reddy's Laboratories Valuation

Dr. Reddy's Laboratories Valuation

According to Prabhudas Lilladher, "Our FY23E/FY24E estimates remain unchanged. We continue to expect steady earnings momentum and pick up in US generic business along with cost optimization. Also, strong pipeline/new launches will drive steady growth in India and RoW markets. We expect 13% EPS CAGR over FY22-24E (ex of Revlimid) and maintain our 'Buy' rating with TP of Rs4,900/share. At (ex of Revlimid) and maintain our 'Buy' rating with TP of Rs4,900/share. "

About Dr. Reddy's Laboratories

About Dr. Reddy's Laboratories

It started in 1984 with a modest investment, 20 employees and a bold vision. Today, it has research and development centres, manufacturing facilities or a commercial presence in 56 countries. It has 23,000-plus employees working towards one clear purpose: to accelerate access to affordable and innovative medicines. The current market capitalization of the company is Rs 71,723.

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.

Story first published: Friday, June 24, 2022, 20:34 [IST]
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