Dr Reddy's Labs hits over 4-year high, surges 62% from March low

Dr Reddy

Dr Reddy’s laboratory stocks hit a more than four-year high of 4,036 rupees, up 5% from BSE on Tuesday in an otherwise weak market. The pharmaceutical company’s stock was trading at its highest level since November 2015. It reached a historic high of 4,383 rupees on October 20, 2015.

With today’s recovery, the share price of Dr. Reddy’s labs jumped 62% from its previous month low of 2,498 rupees in March intraday trading.

Analysts remain confident about the scenario of high demand for the pharmaceutical sector in the domestic and export markets. They also believe that the disruption from the Covid-19 outbreak would not be significant from the standpoint of annual results, as the benefits of a weaker currency could bridge the gap.

For the quarter from January to March (T4FY20), analysts at Kotak Securities expect Dr. Reddy’s activities in the United States to rebound to US $ 235 million (+ US $ 13 million from one quarter over the other), given the benefits of recent launches. The brokerage firm forecasts that the company’s EBITDA margins will be 21.7% and that adjusted EPS will increase by 46% year-on-year (year-on-year).

Anand Rathi Share and Stock Brokers analysts believe that Dr. Reddy’s US business, faced with income pressure, should rebound with the launch of new products and the gradual normalization of price erosion for its key products. In addition, the company, she said, should continue to experience strong growth in India, emerging markets, Europe and PSAI activities driven by volume growth, new launches and improved achievements.

“While the agreement with Wockhardt strengthens operations in India, other strategic initiatives by the company have focused on creating a healthy product pipeline, improving efficiency and controlling costs, disposal of nonessential assets and the engagement with the USFDA to resolve outstanding issues, create additional optimism, “said the brokerage. firm said in an inventory update.



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