⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
DRREDDY - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | DRREDDY | Market Cap | 98,354 Cr. | Current Price | 1,179 ₹ | High / Low | 1,380 ₹ |
| Stock P/E | 21.2 | Book Value | 378 ₹ | Dividend Yield | 0.68 % | ROCE | 25.8 % |
| ROE | 20.3 % | Face Value | 1.00 ₹ | DMA 50 | 1,232 ₹ | DMA 200 | 1,246 ₹ |
| Chg in FII Hold | -2.35 % | Chg in DII Hold | 2.45 % | PAT Qtr | 90.6 Cr. | PAT Prev Qtr | 387 Cr. |
| RSI | 39.0 | MACD | -11.7 | Volume | 6,00,759 | Avg Vol 1Wk | 16,31,181 |
| Low price | 1,020 ₹ | High price | 1,380 ₹ | PEG Ratio | 0.43 | Debt to equity | 0.13 |
| 52w Index | 44.1 % | Qtr Profit Var | -89.3 % | EPS | 55.6 ₹ | Industry PE | 29.0 |
📊 Core Financials
- Revenue & Profit Growth: Quarterly PAT fell sharply from 387 Cr. to 90.6 Cr. (-89.3%), showing earnings volatility despite strong long-term fundamentals.
- Profit Margins: ROE at 20.3% and ROCE at 25.8% reflect strong efficiency and profitability.
- Debt Ratios: Debt-to-equity at 0.13 highlights a low-leverage balance sheet.
- Cash Flows: Dividend yield at 0.68% provides modest shareholder returns.
💹 Valuation Indicators
- P/E Ratio: 21.2 vs Industry PE of 29.0, suggesting undervaluation relative to peers.
- P/B Ratio: Current Price 1,179 ₹ / Book Value 378 ₹ ≈ 3.12, reasonable valuation.
- PEG Ratio: 0.43, indicating growth is priced attractively relative to earnings expansion.
- Intrinsic Value: Estimated fair value around 1,250–1,300 ₹, making current price slightly undervalued.
🏢 Business Model & Competitive Advantage
- Dr. Reddy’s Laboratories is a leading pharmaceutical company with strong global presence in generics, APIs, and biosimilars.
- Competitive advantage lies in R&D capabilities, diversified product portfolio, and regulatory approvals across multiple geographies.
- Focus on innovation and cost-efficient manufacturing supports long-term sustainability.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between 1,150–1,200 ₹, closer to intrinsic value and near support levels.
- Long-Term Holding: Strong fundamentals, global presence, and low debt make it suitable for long-term investors; accumulation recommended for steady compounding in pharma growth.
✅ Positive
- High ROE (20.3%) and ROCE (25.8%) reflect strong efficiency.
- Debt-light balance sheet ensures financial stability.
- DII holdings increased (+2.45%), showing strong domestic institutional support.
⚠️ Limitation
- Quarterly PAT decline (-89.3%) highlights earnings volatility.
- Stock trading below DMA 50 and DMA 200, showing weak momentum.
- Dividend yield at 0.68% is modest compared to industry leaders.
📉 Company Negative News
- Decline in FII holding (-2.35%) indicates reduced foreign investor confidence.
- Technical indicators (RSI 39.0, MACD -11.7) show bearish sentiment.
📈 Company Positive News
- DII holdings increased (+2.45%), reinforcing domestic support.
- Strong global presence and diversified product portfolio.
🏭 Industry
- Pharma industry PE at 29.0, higher than Dr. Reddy’s 21.2, suggesting undervaluation.
- Industry growth supported by rising demand for generics, biosimilars, and global healthcare expansion.
🔎 Conclusion
- Dr. Reddy’s Laboratories is a fundamentally strong pharma company with high efficiency and low debt.
- Valuation is attractive compared to industry peers, though short-term earnings volatility is a concern.
- Best suited for long-term investors with cautious entry around 1,150–1,200 ₹; accumulation strategy recommended for exposure to global pharma growth.
I can also highlight biosimilars and generics demand trends that could further strengthen Dr. Reddy’s long-term growth outlook.