Dr Reddy's Share Price Target Adjusted To Rs 1,050 Amid Margin Concerns: Emkay Report

In a recent report by Emkay Global Financial Services, Dr Reddy's Laboratories received a revised price target of Rs 1,050, down from the current market price of Rs 1,156. Emkay's analysis highlights concerns over the pharmaceutical giant's margin performance in the fourth quarter of FY25, which fell short of expectations.

Dr Reddy's Share Price Target 
According to Emkay, Dr. Reddy's reported a sharp decline of 250 basis points quarter-on-quarter in gross margins, marking the third consecutive quarterly decline. This decline was partly attributed to one-time factors but also reflects ongoing pricing pressures in its core US portfolio, notably impacting products like gSuboxone.

Challenges in Core US Portfolio
The report underscores that the decline in gross margins is indicative of broader pricing pressures in key US markets, despite Dr Reddy's management forecasting double-digit revenue growth and stable margins for FY26. Emkay suggests that the street's margin expectations may need to be adjusted in light of these challenges.

Market Performance and Strategic Moves
Dr. Reddy's reported US sales of USD 417 million for the quarter, slightly above expectations, with notable growth in gRevlimid sales. Domestically, the company achieved a 16% year-on-year growth, although certain therapeutic segments experienced a sequential decline.

Read More 
Tata Steel Q4 Results Preview 2025: Key Expectations & Dividend Buzz

Strategic Initiatives and Future Outlook
Looking ahead, Dr Reddy's remains optimistic about high double-digit growth prospects in India for FY26, driven by new launches and focused marketing efforts in key therapeutic areas. The company also anticipates regulatory milestones for products like Abatacept and Semaglutide in global markets.

‘We broadly maintain our lower-than-street FY26/27 earnings estimates and introduce FY28 estimates. We retain REDUCE with an unchanged Mar-26E TP of Rs1,050,’ as mentioned in the report by Emkay.

Despite challenges in margin performance, Dr. Reddy's is poised to leverage its biosimilar portfolio and strategic expansions in Europe and other markets for future growth. Emkay's cautious outlook reflects ongoing uncertainties in pricing dynamics and competitive pressures in the pharmaceutical sector.
 

Disclaimer

The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party. Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds