Dr. Reddy's Ltd - US the only silver lining in an otherwise forgettable quarter - Emkay

Reco: BUY
CMP: Rs 2177
Target Price: Rs 2589

- DRL's Q1FY14 Results came below our estimates – a) Revenues at Rs 28.4bn (up 12% yoy) b) EBITDA at Rs 4.9bn (down 1% yoy) and c) APAT at Rs 3.6bn (up 7% yoy)

- Domestic formulations business remained flat on account of new pricing policy implementation. US sales grew strong at 37.3%. PSAI sales growth stood at 6%

- Going ahead – Domestic formulations business is expected to grow at 7% in FY14E. Overall global generics growth to be at 16% in FY14E. PSAI to recover back to 11% growth

- Top line CAGR growth of 13% over the next two years is expected. Valuations continue to remain attractive at 16x FY15. We maintain BUY with a TP of Rs.2,589.

Source : Equity Bulls

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