DRREDDY - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.4

🧪 Fundamental Analysis: Dr. Reddy’s Laboratories (DRREDDY)

Dr. Reddy’s is a well-established Indian multinational pharmaceutical company with a strong global footprint, especially in generics and biosimilars. Its fundamentals reflect solid profitability, attractive valuation, and financial discipline — making it a compelling long-term candidate.

Metric Value Implication

P/E Ratio 19.2 Undervalued vs. industry PE of 34.0 — attractive entry point

PEG Ratio 0.50 Excellent — growth is undervalued

ROCE / ROE 22.7% / 18.0% Strong — efficient capital deployment

Dividend Yield 0.62% Modest — adds to shareholder value

Debt-to-Equity 0.14 Low — healthy balance sheet

EPS ₹68.1 Solid earnings base

Qtr Profit Var +1.26% Stable — not explosive, but consistent

FII/DII Holding Change -0.42% / +1.10% Mild FII caution; DII accumulation is a positive signal

📉 Technical Analysis

Current Price: ₹1,300

DMA 50 / DMA 200: ₹1,269 / ₹1,246 → Bullish crossover; trend support intact

RSI: 58.7 → Neutral zone; room for upside

MACD: -2.57 → Slight bearish divergence; short-term consolidation likely

Volume: Slightly below average — steady interest

💰 Ideal Entry Price Zone

₹1,240–₹1,280

This range aligns with 200-DMA support and offers a favorable valuation entry

Avoid chasing above ₹1,350 unless earnings surprise or sector tailwinds strengthen

📈 Long-Term Investment Outlook

Strengths

Attractive valuation with PEG < 1 — undervalued growth

Strong ROCE and ROE — efficient operations

Diversified global presence — resilient business model

Low debt and consistent dividend — financial stability

Risks

Flat quarterly profit growth — limited near-term momentum

MACD suggests short-term weakness

FII trimming — possibly due to global pharma headwinds

Dr. Reddy’s is a high-quality, undervalued pharma compounder with strong fundamentals and global exposure. Ideal for long-term investors seeking stability and growth at a reasonable price.

🏁 Exit Strategy / Holding Period

If you already hold DRREDDY

Holding Period: 3–5 years to benefit from global generics expansion and biosimilar growth

Exit Strategy

Consider partial profit booking near ₹1,400–₹1,420 (recent high)

Reassess if ROCE drops below 15% or PEG rises above 1.5

Hold if earnings remain consistent and valuation stays attractive

Would you like a side-by-side comparison with Sun Pharma, Cipla, or Biocon to explore relative valuation and growth potential in the pharma space?

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