Dr Reddy’s Q3 Results: CLSA raises FY25-27 revenue and margin estimates; check target price

CLSA raised revenue and margin estimates slightly for FY25-27, citing higher-than-expected growth in the recently acquired NRT portfolio.

CLSA has maintained an Underperform rating on Dr. Reddy’s Laboratories with a target price of ₹1,120. The brokerage noted flat YoY but QoQ declines in US sales due to lower gRevlimid contributions in Q3FY25. Despite this, the India business delivered robust growth, increasing 14% YoY.

CLSA raised revenue and margin estimates slightly for FY25-27, citing higher-than-expected growth in the recently acquired NRT portfolio. However, it cautioned that DRL’s high dependence on gRevlimid, a lower chronic mix in its India portfolio, and a long-term EBITDA margin guidance of 25% (lower than FY24’s 28%) could constrain earnings growth over FY25-27.

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Q3FY25 Performance:

  • Revenue: Up 15.9% YoY at ₹8,358.6 crore.
  • Net Profit: Up 2.5% YoY at ₹1,413.3 crore.
  • Margins: Declined to 27.5% versus 29.3% YoY.