Nuvama Institutional Equities has maintained its buy rating on Dr. Reddy’s Laboratories with a target price of ₹1,475 per share after the company reported an in-line Q2FY26 performance on revenue, while EBITDA and adjusted PAT exceeded consensus estimates by 2% and 8%, respectively.
The brokerage said that gross and reported EBITDA margins contracted by about 492 basis points and 175 basis points year-on-year, respectively, mainly due to anticipated price erosion in generic Revlimid (gRevlimid) and increased competition in some portfolio products. However, excluding Lenalidomide, Nuvama estimates Dr. Reddy’s EBITDA margin at 19–20%, assuming a 50% erosion in that product.
The company managed to maintain an overall EBITDA margin of around 25% for the quarter, supported by lower R&D spending — a measure previously guided by management. Nuvama said Q3FY26 is expected to be a weaker-margin quarter, with investor focus now shifting to the company’s pending semaglutide filing in Canada, which could serve as the next key catalyst.
The brokerage remains optimistic on Dr. Reddy’s earnings trajectory, supported by a diversified portfolio, disciplined capital allocation, and operating efficiency.
