Kotak Institutional Equities has reiterated its ‘Reduce’ call on Dr. Reddy’s Laboratories, lowering its target price to ₹1,180, after the pharma major missed estimates on operating earnings despite robust topline growth.
In Q4FY25, DRL reported revenue of ₹8,506 crore, EBITDA margin of 29.1%, and net profit of ₹1,587 crore, all ahead of consensus estimates. However, Kotak pointed out that EBITDA was 13% below their estimates, primarily due to a decline in gross margins, suggesting cost pressures in certain geographies.
The brokerage noted that US sales grew 4% QoQ, while domestic India sales remained sluggish, and added that pricing pressure and regulatory approval cycles remain headwinds in core markets. While long-term growth drivers exist, Kotak sees limited near-term catalysts and prefers to stay cautious.
