Dr. Reddy's Laboratories Limited: Comprehensive Stock Analysis Report | Scrolls
- Editor
- Aug 14
- 2 min read
by KarNivesh | 14 August, 2025
Overview
Dr. Reddy’s Laboratories Limited (DRL), founded in 1984 by Dr. K. Anji Reddy, has grown from an API manufacturer to a global pharmaceutical leader headquartered in Hyderabad, India. It operates across three main segments: Global Generics, Pharmaceutical Services & Active Ingredients (PSAI), and Proprietary Products, serving 200+ countries.
Recent Strategic Moves: DRL is diversifying beyond generics into high-value areas. Key developments include an expanded partnership with Alvotech for a pembrolizumab biosimilar (Keytruda competitor), collaboration with Sanofi to launch Beyfortus™ for RSV prevention in India, and acquisition of a Nicotine Replacement Therapy (NRT) business. Its Hyderabad plant was recognized by the World Economic Forum as an Industry 4.0 Lighthouse, yielding a 43% cost improvement and 30% faster production times.
Financial Performance: Revenue rose from ₹17,517 crore in FY2020 to ₹33,520 crore in FY2025 (13.8% CAGR). Net profit jumped from ₹2,182 crore in FY2022 to ₹5,743 crore in FY2025, with ROE at 18% and ROCE at 22.7%. EPS grew from ₹26.23 to ₹68.07 over the same period. In Q1 FY26, revenue reached ₹8,545 crore (up 11% YoY). Gross margin was 56.9%, slightly down due to generic pricing pressures.
Segment Highlights:
Global Generics – 88% of revenue; North America leads (40% share, ₹3,412 crore in Q1 FY26) with five new U.S. launches and 73 ANDAs pending FDA approval. Europe grew 142% YoY due to NRT, and Emerging Markets saw 18% growth, led by Russia (+28%).
PSAI – ₹818 crore in Q1 FY26, up 7% YoY, supporting backward integration.
Shareholding: Promoters hold 26.64%, FIIs 25.33%, mutual funds 13.61%, and insurance companies 10.58%. No pledged promoter shares signal financial stability.
Valuation & Peers: DRL trades at 18.5x PE vs. the industry average of 37.3x. Price-to-book is 3.0x. Its ₹1.04 lakh crore market cap places it in the mid-cap pharma space, offering better value than peers like Sun Pharma (34.2x PE, ₹3.92 lakh crore market cap).
Stock Performance: DRL has shown volatility but long-term outperformance. Currently at ₹1,258, it sits between its 52-week high (₹1,421) and low (₹1,020). Technicals suggest a neutral-positive outlook.
Balance Sheet: Debt-to-equity is a low 0.14, with ₹2,450 crore net cash as of March 2025. FY2025 capex was ₹2,700 crore, with similar spending planned for FY2026. Q1 FY26 free cash flow was ₹451 crore, supporting dividends (0.64% yield).
With strong financial health, global reach, a growing biosimilar portfolio, and attractive valuations, DRL remains a compelling long-term investment despite regulatory and pricing challenges.
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