Maintain 'buy' on Dr. Reddys Lab – TP Rs.1803 - Geojit BNP Paribas Financial Services

- Company missed expectations in 1QFY13.

- 1Q PAT missed market expectations. The miss was primarily due to the material qoq drop in the US base business due to pricing pressure in some products, muted growth in API and high SG&A costs.

- Indian business growth at 19% yoy and Russia business growth at 30% yoy were the big positives.

- Weak US business was also due to the lack of new product launches during the quarter as new launches helps to offset price declines in base business.

- The company introduced two products recently and expects them to make a meaningful contribution in 2Q.

- It guided for another 8-10 new launches in the US in FY13. Retained FY13 EPS estimate but lower FY14E EPS 5%.

- Target price of Rs.1803 has been maintained with 'buy' rating.

Source : Equity Bulls

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