Top brokerages have delivered a mixed outlook on Dr. Reddy’s Laboratories following its Q1FY26 results. While Jefferies and CLSA retained their Underperform ratings citing concerns over U.S. business momentum and gRevlimid tapering, Morgan Stanley maintained an Equal-Weight stance with a ₹1,298 target.
CLSA: Cautious on U.S. growth taper
CLSA kept an Underperform rating with a target of ₹1,120, saying Q1 earnings were in line with estimates. However, it expects the U.S. base business to be flat or grow at low single digits, and noted that gRevlimid sales could start tapering from Q3FY26. The potential launch of Semaglutide in Canada and India may partly offset this slowdown, CLSA added.
Jefferies: Q1 miss, watching key launches
Jefferies also retained an Underperform rating with a lower target of ₹1,100, citing a Q1 miss due to a decline in U.S. sales, particularly gRevlimid and the base business. SG&A and R&D expenses stayed elevated. However, Jefferies is watching two key pipeline catalysts: the approval of gOzempic in Canada and U.S. filing for Abatacept, which it believes could meaningfully contribute to revenue if launched on time.
Morgan Stanley: Balanced view
Morgan Stanley took a more neutral stance with an Equal-Weight rating and a target price of ₹1,298. It noted that Q1 revenue grew 11% YoY, but gross margins declined due to higher price erosion and lower operating leverage. EBITDA was in line, while PAT rose 2% YoY. Morgan Stanley believes the risk-reward remains balanced.
Disclaimer: The brokerage views expressed above are solely those of the respective firms. This article does not constitute investment advice. Readers are advised to consult their financial advisor before making any investment decisions.
