Buy Dr. Reddy's Laboratories, target price Rs 6400: Centrum Broking

Centrum Broking has buy call on Dr. Reddy's Laboratories with a target price of Rs 6400. The current market price of Dr. Reddy's Laboratories Ltd. is Rs 5275.95.

Dr. Reddy's Laboratories Ltd., incorporated in the year 1984, is a Large Cap company (having a market cap of Rs 87734.71 Crore) operating in Pharmaceuticals sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 4850.80 Crore, down -3.22 % from last quarter Total Income of Rs 5012.40 Crore and up 7.26 % from last year same quarter Total Income of Rs 4522.50 Crore. Company reported net profit after tax of Rs 539.40 Crore in latest quarter.

Investment Rationale
DRL is better poised to scout more brand acquisition deals focused in India even beyond Wockhardt, given the strong balance sheet. Key Assets: 1) The gNuvaring CRL – responded and await replay from USFDA, Oct21; 2) gCopaxone – CRL has been received again, response expected in couple of months. DRL CGMP compliance status is at best level, as EIRs have been received for all pending facilities. The brokerage maintains Buy recommendation on DRL with target price at Rs. 6,400 inclusive of NPV from largely gRevlimed and SputnikV. At the CMP of Rs. 5,203, DRL trades at 26.2x FY22E EPS of Rs 198.5and 23.1x FY23E EPS of Rs225.4.

Promoter/FII Holdings
Promoters held 26.7 per cent stake in the company as of March 31, 2021, while FIIs held 29 per cent, DIIs 14.3 per cent and public and others 30 per cent.

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