DRREDDY - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.5

🧾 Core Financials

Earnings Strength: EPS of ₹82.6 and PAT of ₹2,961 Cr (up 109% QoQ) reflect exceptional profitability. ROCE at 25.8% and ROE at 20.3% are outstanding, indicating efficient capital deployment.

Debt Profile: Debt-to-equity of 0.12 — low leverage, which enhances financial resilience.

Cash Flow: Strong operating cash flows are implied by consistent profitability and low debt. Net income (TTM) stands at ₹5,680 Cr with revenue of ₹33,426 Cr

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💰 Valuation Indicators

Metric Value Insight

P/E Ratio 16.0 Undervalued vs. industry PE (33.4)

P/B Ratio ~3.82 Reasonable premium over book value

PEG Ratio 0.33 Undervalued relative to growth

Dividend Yield 0.60% Modest, consistent payout

Valuation is attractive, especially given the PEG ratio and strong earnings momentum.

🧪 Business Model & Competitive Advantage

Dr. Reddy’s Laboratories Ltd. is a global pharmaceutical powerhouse with operations across

Global Generics: Branded and generic formulations

Pharmaceutical Services & Active Ingredients (PSAI): APIs and custom synthesis

Biologics & OTC: Expanding footprint in biosimilars and consumer health

Key strengths

Strong presence in North America, Europe, India, and Russia

Robust R&D pipeline and strategic acquisitions (e.g., STUGERON portfolio from Janssen)

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Regulatory compliance across USFDA, EMA, and WHO standards

Recent quarterly revenue hit ₹8,545 Cr — the highest ever — driven by new launches and price hikes

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. However, the USFDA issued a Form 483 with five observations at its Hyderabad facility, which the company is addressing

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📈 Technical & Sentiment Indicators

RSI: 63.0 – Approaching overbought zone.

MACD: 15.5 – Bullish momentum.

Volume Dip – Slightly below weekly average, suggesting consolidation.

DMA 50 & 200: Price is above both, confirming medium-term strength.

Despite recent regulatory headwinds, the stock has posted a 4.75% return over the past month

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💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹1,250–₹1,280, near DMA 200 and below current price.

Current Price ₹1,322: Slightly above ideal entry — consider partial accumulation or wait for a dip.

🕰️ Long-Term Holding

Strong Hold or Accumulate on Corrections: Global scale, low debt, and high ROE/ROCE make Dr. Reddy’s a compelling long-term play.

Watch Regulatory Developments & Institutional Sentiment: USFDA observations and FII outflow (−0.42%) warrant short-term caution, while DII inflow (+1.10%) reflects domestic confidence.

You can explore Dr. Reddy’s live price dashboard and technical indicators or review its recent USFDA inspection update for deeper insights. Let me know if you'd like a peer comparison with Sun Pharma or Cipla.

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stockanalysis.com

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Business Standard

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economictimes.indiatimes.com

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