Dr Reddy's Laboratories :Acquires select UCB India portfolio: Nomura Research

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Dr Reddy’s Laboratories Ltd. | Q3FY15 Result Update | Operationally good quarter | Maintain BUY rating on the stock with revise PT of Rs3,819 ::IndiaNivesh

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Dr Reddy's : Buy on dips to Rs.2968 - Rs 3044 for Target of Rs 3278 in 1 quarter:: HDFC Securities

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Dr. Reddy’s Laboratories - Solid Quarter, But Challenges in Near Term ::Edelweiss

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Dr Reddy’s Laboratories - US growth a positive surprise… :: ICICI Securities

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Dr Reddy’s Laboratories: Buy:: Business Line

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Dr Reddy's: Short-term temperance, outlook depends on US • : ICICI Securities, PDF link

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Dr Reddys Laboratories Ltd. (DRL)|Q2FY15 Result Update | Operationally weak quarter; however, outlook remains optimistic |We maintain BUY rating on the stock at price target of Rs3,453 :: IndiaNivesh

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Dr. Reddy's -Sharp margin recovery in the US but ex-US disappointed ::Credit Suisse

● Jun-13 was a weak quarter for ex-US business on both sales and
margins. India sales growth was flattish, Russia grew 3% while
PSAI grew by just 6%. Price erosion on some APIs resulted in
PSAI margins declining from 30% avg to 19% - management
expects normalisation but the normal could have been set lower.
● Positive takeaway of the Jun-13 quarter was the sharp improvement
in gross margins of global generics (up 380 bp QoQ) despite weak
India and Russia, and hit on Lansoprazole. This was driven by
contribution of high margin Reclast and lower sales of finasteride.
● Our estimates are largely unchanged (except for 1Q14 miss) as
benefit of INR depreciation is offset by (1) lower PSAI margins (2)
higher R&D guidance of 8-9% (3) higher pricing policy impact of
Rs550mn in India vs. our expectation of Rs250-300 mn.
● We increase our TP to Rs2,420 (from Rs2,180) as we remove the
discount of 10% to its peers and value at 20x FY15E. DRL US
pipeline has improved with several limited competition approvals
lately (like Injectables) and several pending like Vidaza, Copaxone,
etc. DRL is now focusing on topicals, patches and inhalers.

Dr. Reddy's Lab Strong, but in-Line, F4Q13; Staying OW:: Morgan Stanley India

We maintain our OW rating on DRL in view of steady
growth momentum, driven by India, US, and RoW
businesses and reasonable valuations. We believe
that the company’s efforts to focus on complex
generics and bio-similars will help sustain high-teen
P/E multiples. Raise PT to Rs2,288.
Business Outlook – Management refrained from giving
F2014 financial guidance. However, longer term, it is
optimistic about the company’s growth and expects
up-trending margins. Nearer term, it expects non-US
businesses (India, Russia, PSAI, etc.) to retain their
trend-line growth, and US to deliver 1-2 complex
generics p.a. (subject to FDA approval). It expects
F2014 R&D expense to rise to 7-8% of sales, an F2014
tax rate of 22-23%, and capex of Rs5-6bn.
Conference call highlights – US pricing is being hurt
by customer consolidation (largely baked in the quarter)
and incremental competition (such as tacro, lanso –
some effect may still come). Incremental US filings are
focused on differentiated products, including injectables,
delayed release, topical (steroid and non-steroid), and
patches. DRL does not see imminent risk to business
from the proposed government rules in Russia for local
manufacturing (for government-funded products).
Capex is for injectables, bio-similars, and SEZ facilities.
In-line F4Q13 – REDY reported total revenue of
Rs33.4bn, up 26% yoy (17% qoq), largely driven by US,
Russia, and PSAI segments. OPM (ex. one-time
settlement income) expanded 290bp yoy (210bp qoq),
to 18.6%. These factors led to adjusted net profit of
Rs4.4bn, up 29% yoy, 17% qoq, vs. our Rs4.3bn
estimate (reported net profits were Rs5.7bn)
Price target change: Our higher price target is largely
based on a higher target multiple, as visibility improves
and industry valuations rise.

Dr Reddy :: 4Q Results Ahead of Estimates; Management Tempers Expectations, Leaves Room for Positive Surprises. Raise PT to Rs2300:: JPMorgan,

DRRD reported 4Q revenue growth of 26% YoY ahead of expectations driven by
strong growth in NA, PSAI business. EBITDA margins declined 570bps YoY on
account of higher S,G&A costs. DRRD refrained from giving guidance for FY14
due to uncertainty in US on account of delays in regulatory approvals for new
products. In our view, following disappointments on guidance in the past on
account of similar delays, mgmt seems to be taking a more conservative view.
While we do not rule out potential delays in the US, we believe the product
pipeline remains strong and focus on complex generics bodes well. Despite the
stock being up 24% over past 12m, it still trades at 18xFY14E P/E, at 5%/39%
dis. to LPC/SUNP. We believe with mgmt tempering expectations, likelihood of
positive surprises are high. We maintain OW with revised PT of Rs2,300

Technicals - Eros, SKS, Dr Reddy, tata communications, Sterlite Industries, :: Business Line

Dr Reddy’s Laboratories - HOLD :: Business Line

Dr.Reddy's Laboratories - Strong momentum in ensuing quarters; visit note; Hold :: Edelweiss PDF link

Dr.Reddy’s Laboratories (DRRD IN, INR 1,646, Hold)

We recently met Dr. Reddy’s (DRRD) management. The company anticipates higher growth over the next two-three quarters led by strong sequential growth in US & PSAI and continued traction in India & Russia. Moreover, incremental growth will be accompanied by higher currency realisations aiding margin. Given improved growth visibility for balance FY13, the stock may do well over the next three-six months. However, owing to moderate FY14 outlook we continue to maintain ‘HOLD’.

Dr Reddy's Laboratories: Prepared for the journey ahead ::Kotak Sec,

Dr Reddy's Laboratories: Prepared for the journey ahead
` Balanced portfolio to deliver 16% revenue CAGR for 2013-15E
` Stable financial performance: 11% upside. Upgrade to ADD
` Diverse research efforts provide long-term visibility
` Key risks: Approval delays, competition, price controls

Dr. Reddy’s Labs :Good overall growth :Centrum

Good overall growth
Q1FY13 results of Dr. Reddy’s Labs (DRL) were in line with our
expectations. DRL reported 28%YoY growth in revenues, 130bps
improvement in EBIT margin and 28%YoY growth in net profit. The
growth was driven by global generic business (75% of revenues),
which grew by 32%YoY. The company is likely to benefit from the
$170bn (Rs9,350bn) patent expiry opportunity till 2015. DRL has a
pipeline of 73 ANDAs pending approval, of which 36 are Para IV and 6
FTF opportunities. The company is also likely to benefit from
cumulative 550 DMF filings. We have a Buy rating on the scrip with
target price of Rs2087 (based on 23x FY14E EPS of base EPS of
Rs90.2+FTF EPS Rs12.4) with an upside of 26%.
New Product launches in the US: DRL has benefited from the launch of the
following new products in the US in Q1FY13: clopidogrel, lansoprazole OTC,
ziprasidone and quetiapine. DRL’s 29 prescription products feature among
top 3 in the US generic market.
Sequential decline in US revenues: DRL’s US business has witnessed $16mn
sequential fall in revenues from $176mn in Q4FY12 to $159mn due to stiff
competition and price erosion of existing products. The management is
optimistic of improved revenues from the new product launches.

Dr Reddy's Laboratories: Slow start to the year, recalibrating estimates : Kotak Sec, PDF link

Dr Reddy's Laboratories (DRRD)
Pharmaceuticals
Slow start to the year, recalibrating estimates. 1QFY13 PAT missed our estimate of
Rs4 bn by 17% due to (1) severe pricing erosion in the US, (2) lack of approvals for
limited competition products, (3) high SG&A costs and (4) lower sales realization due to
hedges. We lower our FY2013E total sales to US$2.2 bn, down US$120 mn, lower than
management guidance of US$2.5 bn. We expect base business EBITDA margin
expansion to be constrained by high SG&A cost, limited expansion in gross margin and
higher R&D spend. We lower our FY2013-14 PAT estimates by 10-14% due to lower
sales, lower base business margin and a higher tax rate. Maintain REDUCE with TP of
Rs1,740, 20X 12 month forward base business core earnings.

Dr Reddy’s Labs Reasonable valuations; growth prospects intact; upgrade to Buy : Anand Rathi

Dr Reddy’s Labs
Reasonable valuations; growth prospects intact; upgrade to Buy
Having corrected ~15% in the last two months, Dr Reddy’s Labs now
offers ~20% upside potential. We are optimistic of its business outlook
and growth prospects, led by its US generics business, due to its
product launches with limited competition and expected recovery in
domestic formulations. We upgrade the stock from a Hold to a Buy,
due to its reasonable valuations and our expectations of sustained
strong performance in the medium term. However, we lower the price
target to `1,900 (from `1,910 earlier) as approval for Lipitor has not
come in.

Highlights of our meeting with Dr Reddy’s CFO :Nomura research,

We met with with Dr Reddy’s CFO Mr Umang Vora. The CFO sounded
positive on the company’s FY13 outlook and expects Dr Reddy’s to
achieve at least US$2.5bn in revenues. With some product approvals
and market share gains, the turnover could reach US$2.7bn in FY13.
Management expects the growth momentum to pick up from Q2
onwards, and Q1 may remain relatively weak due to lack of new
launches. The US remains the most important growth driver with the
potential for positive surprise from undisclosed products. The company
expects to launch 15-20 products in the US every year until FY17, with
1-2 low-competition complex generics. These new launches are likely to
contribute US$100-200mn in revenue in the first year of launch. The
focus remains on hard-to-characterise and complex chemistry products
(Arixtra approval and Copaxone DMF filing are indications). Going
forward, growth in Russia is expected to be at 15-20% and is likely to be
characterised by interesting differentiated product launches such as
Rituximab and partnership products. In India, growth is back on track
and is expected to grow in line with the broader market. We believe
through internal development programs and partnerships (like GSK and
Merck Serono) the company is putting in place a sustainable growth
platform and at the same time managing risks. The valuation at 16x
FY13 is attractive, in our view. We maintain our Buy rating with a 12-
month target price of INR1,918. Below, we present highlights of our
meeting with management.

Dr. Reddy's Laboratories - Investing in next leg of growth; visit note; Hold; Edelweiss, PDF link

Dr. Reddy’s Laboratories (DRRD IN, INR 1,649, Hold)

We met Mr. Satish Reddy, MD & COO, Dr. Reddy’s (DRRD). Though management agrees that revenue growth will moderate beyond FY13, it remains focused on building niche pipeline in US while maintaining steady growth in emerging markets. OTC portfolio focus and biosimilars will be key growth drivers in emerging markets. US growth may remain challenging and may come with lower margins due to increase in customer consolidation, which has led to higher price erosion in generics. We expect earnings growth of 9.5% over FY13-15E. Maintain ‘HOLD’.