Nomura upbeat on Dr. Reddy's long-term prospects; maintains ‘Buy' call with Rs 1,575 target
Nomura has maintained its Buy rating on Dr. Reddy's Laboratories, setting a target price of ₹1,575, following the company's strategic roadmap shared during a recent management interaction.
The company laid out four key levers to sustain growth and profitability beyond the gRevlimid opportunity, including:
Sustained growth in the base business,
Significant upside potential from semaglutide, the blockbuster diabetes and weight-loss drug,
Capacity to undertake selective acquisitions in the $2–2.5 billion range, and
A strong focus on cost rationalisation, with plans to reduce operating expenses by 500 basis points — from 37% to 32% of sales — thereby maintaining EBITDA margins around 25%.
Dr. Reddy's, a major Indian pharmaceutical company with a strong global presence, has expanded its footprint across generics, biosimilars, and active pharmaceutical ingredients (APIs). It has also been building its presence in high-value markets like the US, Europe, and emerging markets through a mix of organic growth and strategic deals.
Nomura believes the combination of margin optimisation, pipeline monetisation (including complex generics like semaglutide), and balance sheet flexibility places the company in a strong position for long-term value creation.
Disclaimer: The views and target prices mentioned are as stated by Nomura and do not represent the opinions or recommendations of this publication. Investors are advised to consult their financial advisors before making any investment decisions.
Markets Desk at BusinessUpturn.com
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