Here's How Dr Reddy's Aims To Drive Growth In India Market

India remains a pivotal market for Dr Reddy's Laboratories Ltd., MV Ramana, chief executive officer of branded markets (India and emerging Markets) said, as he outlined three primary levers guiding its focused strategy aimed at driving growth.

Firstly, the pharmaceutical company is committed to expanding its base business, leveraging its portfolio of strong brands and established market acceptance to maintain and strengthen its position in the Indian market, Ramana told NDTV Profit's Sajeet Manghat in an interview.

Dr Reddy's is actively pursuing innovation across multiple fronts, including the development of innovative assets, consumer health products and digital therapeutics. Thirdly, the drugmaker is exploring inorganic opportunities to address portfolio gaps and enhance its presence in chronic disease management.

While the exact impact on sales for the current financial year remains uncertain, Ramana emphasises the company's confidence, supported by its strong cash position. "We would continue to look for opportunities that are meaningful with the right value and where we could add our synergies to the business," he said.

Ramana pointed out that there are capital-expenditure initiatives scheduled for fiscal 2025–26. He said the primary focus during this period would be on product launches and identifying areas where additional capex is needed to support these launches.

The pharmaceutical company's net profit jumped 36% to Rs 1,310 crore in the fourth quarter of fiscal 2024, beating analysts' estimates of Rs 1,215 crore.

• Net profit up 36% to Rs 1,310 crore versus Rs 960 crore (Bloomberg estimate: Rs 1,215 crore).

• Revenue up 13% to Rs 7,114 crore versus Rs 6,315.2 crore (Bloomberg estimate: Rs 7,027 crore).

• Ebitda up 19% to Rs 1,831 crore versus Rs 1,534 crore (Bloomberg estimate: Rs 1,810 crore).

• Margin expands to 25.7% versus 24.3% (Bloomberg estimate: 25.8%).

• Nuvama retains 'reduce' on Dr Reddy's with a target price of Rs 5,028 apiece.

• The core business Ebitda margin, excluding gRevlimid, corrected 200–300 basis points year-on-year to 17%, implying weakness in base profitability. 

• The company's complex product research and development, coupled with weakness in the domestic business, may keep base profitability tepid, while growth initiatives would kick in beyond fiscal 2027.

• Motilal maintains a 'neutral' rating on the stock with a target price of Rs 6,070 apiece.

• After delivering a 30% year-on-year earnings growth in fiscal 2024, Motilal expects earnings growth to moderate to a 3.5% compound annual growth rate over fiscal 2024–26, partly due to a gradual build-up of market share of g-Revlimid.

• The investment in the joint venture with Nestle and in the biosimilar segment should drive commercial benefits after fiscal 2026.

• The valuation adequately factors in the upside in earnings.

Shares of Dr Reddy's fell as much as 4.87% during the day to Rs 5,952.70 apiece on the NSE. It was trading 3.41% lower at Rs 6,044 per share, compared to a 0.0.8% advance in the benchmark Nifty at 11:48 a.m.

The stock has risen 4.23% on a year-to-date basis and 1.98% in the last 12 months. The total traded volume so far in the day stood at 4.7 times its 30-day average. The relative strength index was at 43.34.

Fifteen out of the 40 analysts tracking the company have a 'buy' rating on the stock, 11 recommend 'hold' and 14 suggest 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 2.8%.