Nuvama has upgraded its rating on Dr. Reddy’s Laboratories (DRL) to ‘Buy’ with a target price of ₹1,553/share, reflecting a potential upside of 14.8% from the current market price (CMP) of ₹1,352.75.
Key highlights on Dr. Reddy’s share:
- Revlimid Patent Expiry:
- The 2026 expiry of Revlimid’s patent poses a significant challenge as the drug contributes approximately 40% of DRL’s FY24 EBITDA.
- Management acknowledges the threat and has proactively developed strategies to mitigate the impact.
- Key Product Launches:
- Semaglutide in Canada and Abatacept biosimilar in the US are expected to significantly offset revenue and EBITDA losses from Revlimid’s patent expiry.
- These assets are part of the company’s long-term growth strategy to sustain earnings.
- Mitigation Impact:
- Nuvama estimates that DRL’s proactive measures will mitigate about 80% of the expected EBITDA impact from the Revlimid loss.
- This positions the company favorably in terms of risk-reward dynamics.
Nuvama highlights DRL’s proactive steps and key product launches as strong growth enablers that can offset the revenue impact of Revlimid’s patent expiry. These efforts underline management’s strategic approach to sustaining profitability, making DRL an attractive investment at current levels.
Disclaimer: The above analysis is based on provided data and is for informational purposes only. It does not constitute financial advice. Readers should consult their financial advisors before making investment decisions.
