Dr Reddy's Q2 performance sees revenue boost, but challenges persist

Dr Reddy’s Laboratories posted a mixed show successful Q2FY25, reporting grounds gross of Rs 8,038.2 crore, marking a beardown 16.5 percent year-on-year rise, somewhat exceeding the estimation of Rs 7,854 crore. This growth, driven by robust income successful North America, saw measurement gains offsetting immoderate terms erosion. However, nett net came successful astatine Rs 1,255.7 crore, a important 15.3 percent diminution compared to Rs 1,482.2 crore successful the anterior year, which besides missed the forecasted Rs 1,443 crore, according to Zee Business estimates. 

EBITDA roseate modestly by 7.7 percent to Rs 2,168.9 crore, beneath expectations of Rs 2,220 crore. EBITDA margins saw a decline, settling astatine 27 percent, down from 29.2 percent past year, underscoring borderline pressures amid acquisition costs, authorities taxes, and different impairments. Management has indicated that EBITDA margins are apt to stay astatine these levels done FY25 arsenic it navigates the interaction of these factors.

Limited catalysts ahead; brokerages stay cautious

Despite coagulated gross growth, brokerages support a cautious outlook connected Dr Reddy's owed to constricted near-term catalysts. Nuvama Institutional Equities retained a 'reduce' rating, highlighting the lack of a beardown cause pipeline. Dr Reddy’s has ramped up its R&D efforts, peculiarly successful biosimilars and biologics, but has refrained from detailing important upcoming launches. Nuvama acceptable a people terms of Rs 1,215 for the stock, and Jefferies besides remains cautious, citing precocious SG&A costs and maintaining an 'underperform' standing with a people of Rs 1,130.

While Dr Reddy’s is eyeing opportunities successful the GLP-1 and peptide segments, including a imaginable 2027 motorboat of biosimilar Abatacept, Citi remains skeptical and issued a ‘sell’ telephone with a people of Rs 1,110. However, Bank of America Securities sees aboriginal potential, maintaining a ‘buy’ standing with a people terms of Rs 1,530, driven by Dr Reddy's strategy to capable the spread created post-Revlimid patent expiry successful 2026.