Revenue from operations for the September quarter climbed 10% to Rs 8,828 crore, compared with Rs 8,038 crore in the same period last year, even as operating profit slipped 3.23% to Rs 2,010 crore.
The stock ended at Rs 1,284 on Friday, up 0.3%, ahead of a slew of brokerage notes that maintained a bullish stance on the company despite near-term earnings headwinds.
Brokerages keep bullish calls, trim estimates:
Elara Capital
Elara Capital retained its ‘Buy’ rating on Dr Reddy’s Laboratories with a target price of Rs 1,588, noting that “revenue and EBITDA were below estimates; India up 13% YoY.” The brokerage stated that sales from Revlimid, which contributed approximately USD 1.7 billion over four years, are expected to decline from the December quarter.Elara highlighted the next major growth trigger as the launch of gSemaglutide in Canada, India, Turkey, and Brazil from calendar year 2026. The brokerage estimated potential revenue of $100 million from Canada alone, supported by a 12 million pen capacity. It also cited potential upside from the launches of biosimilar Abatacept (Orencia) in the U.S., with intravenous and subcutaneous options expected by FY27 and FY28, respectively, and a revenue potential of over USD 100 million.
“Strong domestic growth; steady Russia/EMs & EU outlook,” Elara noted, while cutting its FY26 earnings per share (EPS) estimate by 10% and FY27–28 by 3–4% due to gRevlimid and margin impact.
Nuvama
Nuvama Institutional Equities also maintained its ‘Buy’ rating, lowering the target price slightly to Rs 1,475 from Rs 1,486. It said the company’s second-quarter revenue was in line with expectations, while EBITDA and profit after tax beat consensus estimates by 2% and 8%, respectively.
However, the brokerage pointed out that the EBITDA margin contracted by about 492 basis points year-on-year due to price erosion in Lenalidomide and product competition. “Excluding Lenalidomide, EBITDA margin is around 19–20%; maintained ~25% overall via R&D cuts,” it said, adding that margins in the next quarter are likely to remain weak.
Nuvama expects the company to focus on filing for Semaglutide in Canada and trimmed its FY27 EPS forecast by 1%.
Also read |Ola Electric vs Ather Energy shares: Which EV bet looks stronger for your portfolio right now?
Nomura
Nomura said Dr Reddy’s second-quarter earnings were ahead of its cautious expectations, with sales, EBITDA and profit after tax beating its forecasts by 7%, 21% and 18%, respectively. “Except for North America, the company recorded double-digit growth year-on-year in other regions and segments,” Nomura noted.
The brokerage maintained a ‘Buy’ rating with a December 2026 target price of Rs 1,650, observing that “low Street expectations make risk-reward favorable.” Nomura added that the decision by Health Canada on Dr Reddy’s Semaglutide application is expected “this week or soon thereafter.”
“If approved, Dr Reddy’s will be the first generic approval in Canada and may be the only player on day-one of generic market formation in January 2026,” the brokerage said. Nomura expects this could offer a significant near-term earnings boost, though the advantage may taper as more competitors enter.
The brokerage also reaffirmed that the company plans to file for biosimilar Abatacept by end-December 2025, calling product-specific opportunities and cost-control efforts key drivers for valuation re-rating.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)