Dr Reddy shares hit a series of record highs on all-round strong Q1 performance; what should investors do?
Dr Reddy's Laboratories (DRL) shares have scaled a series of record peaks in the past few days. This week, the pharmaceutical major reported a strong all-round quarterly performance, with a better-than-expected 18.2 per cent year-on-year increase in net profit to Rs 1,405 crore for the April-June period.
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Dr Reddy's Laboratories (DRL) shares hit a record high on Friday, adding to a series of unprecedented levels scaled this week, riding on the back of strong corporate earnings. The stock of Dr Reddy's — India's third-largest drug maker by market capitalisation (mcap) — gained by as much as Rs 112.2 or two per cent to Rs 5,616.3 apiece on BSE, its highest-ever intraday level.
Dr Reddy's Labs Q1 results
After market hours on Wednesday, Dr Reddy's reported a strong all-round quarterly performance, with a better-than-expected 18.2 per cent year-on-year increase in net profit to Rs 1,405 crore for the April-June period.
Its revenue grew 29.2 per cent to Rs 6,738 crore compared with the corresponding period a year ago, and earnings before interest, taxes, depreciation and ammortisation (EBITDA) expanded more than two times to Rs 2,042 crore from Rs 924 crore, according to a regulatory filing.
Dr Reddy's Labs' margin — a key measure of profitability — expanded by 1,260 basis points to 30.3 per cent.
According to Zee Business research, DRL's quarterly net profit was estimated at Rs 1,036 crore, revenue at Rs 6,432 crore, EBITDA at Rs 1,658 crore and margin at 26 per cent.
The company reported 79 per cent year-on-year growth in revenue from North America, driven by product launches and favourable forex rates. Read more on Dr Reddy's Q1 results
Should you buy, hold or sell Dr Reddy's shares?
Brokerages held mixed views on the pharma stock after the earnings announcement.
According to Jefferies, which maintained a 'buy' rating on the stock with a Rs 730 raise in the target price to Rs 6,330 — implying a 15 per cent upside from Thursday's closing price, the company's US sales should remain steady in the near term in a favourable pricing environment.
The brokerage raised its earnings per share (EPS) estimates for the company for three years till March 2026 by 9-11 per cent.
| Brokerage | Rating | Target price |
| JPMorgan | Underweight | Raised to Rs 4,450 from Rs 3,780 |
| Jefferies | Buy | Raised to Rs 6,330 Rs 5,600 |
| Citi | Sell | Rs 4,900 |
| Goldman Sachs | Neutral | Raised to Rs 5,075 from Rs 4,750 |
| Macquarie | Outperform | Rs 5,250 |
How Dr Reddy's shares fared in Q1
DRL shares finished the June quarter with a gain of 11.6 per cent, in line with a 10.5 per cent rise in the benchmark Nifty index.
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