Views on Dr Reddys Lab 4QFY2014 results - Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on Dr Reddys Lab 4QFY2014 results:

Results below expectations on all fronts - Stocks down by 2.9%

"DRL, posted numbers lower than the expectations. DRL, posted net sales of Rs. 3408cr V/s Rs. 3,881cr expected, posting a yoy growth of 4%. The main growth came in from the global generics, 21% yoy, while the PSAI declined by 35% yoy. The global generics, growth came in on back of the USA and India which grew by 31% yoy and 18% yoy respectively. Russia and CIS, on other posted flat growth. ROW market, on the other hand posted gains of 48% yoy. The PSAI, on the other hand declined mainly on back of Europe and India, which declined by 46% and 39% respectively. On, the gross profitability, the GPM, expanded by 680bps to end the period at 57.2%. However, on back of the lower sales growth, higher SG&A expenses which grew by 18% and R&D expenses, which grew by 71% yoy, lead the OPM to come in at 22.4% V/s 24.4% expected, up from 21.4%in 4QFY2013.Also, the other income dipped by 86% yoy. These factors, along aided the company to post a net profit of Rs. 481.6cr V/s Rs. 825cr expected, posting a dip of 16.0% yoy. We maintain our buy recommendation on the stock with a price target of Rs. 3,634."

Dr Reddy's Lab (CMP:Rs. 2,730 / TP:-Rs. 3,634 / Upside:-33.1%)

Source : Equity Bulls

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