ECONOMY

Dr. Reddy’s Q1 Results: Brokerages Stay Positive Despite Profit Decline

Most analysts remained bullish on Dr. Reddy’s Laboratories Ltd., citing benefits from the launch of key generics of drugs that reduces cardiovascular risk and blood Phe level, and new products in the U.S. and EU. Still, the stock fell to the lowest in more than three months.

The drugmaker saw its profit decline by a third sequentially in the quarter ended June, dragged by a one-time settlement. Its revenue, however, rose 4% over the preceding three months. Ebitda margin contracted by 720 basis points as marketing and research expenditure increased.

While the analysts maintained their bullish investment recommendation, they remained cautious over the price erosion in the American markets, coupled with the company’s disclosure of an investigation into an anonymous complaint alleging an unfair practice in Ukraine that violates the U.S. anti-corruption laws.

The drugmaker has received a subpoena from the Securities and Exchange Commission and is in the process of responding to it.

Shares of Dr. Reddy’s fell as much as 3.48% to Rs 4,675 apiece, the lowest since April 9, 2021, in early trade on Wednesday. Of the 43 analysts tracking the stock, 33 have a ‘buy’ rating, eight suggest a ‘hold’ and two recommend a ‘sell’, according to Bloomberg data. The average of the 12-month consensus price targets implies an upside of 16.8%.

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