Dr Reddy's cost controls bode well for margins and profitable growth
RDY•Dr Reddy's Laboratories shares rose 3.3% after quarterly profit beat estimates, with analysts citing better margins and lower spending. Views on the margin recovery were mixed, while broker price targets ranged from 1,150 to 1,491 rupees.
1. Margins drive analyst views
Jefferies said EBITDA beat estimates by 15% on better gross margins and lower spending, while strong India and international branded markets supported its core business outlook. Goldman Sachs attributed the margin surprise to better generics margins and cost savings, but remained cautious about the size of the Canada semaglutide opportunity.
2. Recovery and launches
BOB Capital Markets said the worst of the margin pressure was likely over, citing sustained North America sales, higher-margin branded businesses and a pipeline of launches. CLSA said margin recovery was gaining traction on better cost controls and lower R&D spending; it expected semaglutide supplies to resume by November and saw new US and India launches supporting growth.
