Views on Dr Reddys Lab 1QFY2016 Results: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on Dr Reddy's Lab 1QFY2016 Results:

"Dr Reddy's Lab (DRL), for its 1QFY2016 results, posted lower than expected results on sale and net profit front, while the OPM came in at better than expected. On sales front, the company posted a 6.8% yoy growth on top line to end the period at INR 3758cr V/s INR 4000cr expected, mainly driven by global generics. Global generics posted sales of INR 3096.1cr, registering a yoy growth of 8%, while the PSAI posted sales of INR 561.4cr, a yoy growth of 1%. The propriety products (INR 100.3cr) and others posted a yoy growth of 12%. The key driver of growth in the Global Generic business was Europe (INR 191.2cr), which posted a yoy growth of 43%, mainly driven by the new products during the quarter. Another region which posted a robust growth during the quarter was India, which posted a yoy growth of 19%.

On the operating front, the gross margins came in at 67.1% V/s 64.6% in 1QFY2015, mainly on back of improved sales from Europe and India, which aided the OPM's to come in at 26.2% V/s 23.2% in 1QFY2015, and 23.3% expected. R&D expenditure during the quarter came in at 11.7% V/s 12.9% expected and 11.0% of sales in 1QFY2015. Consequently; the PAT came in at INR 625cr V/s INR 642cr expected and V/s INR 550cr in 1QFY2015, a growth of 13.6% yoy. The other income during the period came in at INR 34cr V/s INR 72cr in 1QFY2015, which lead the PAT growth to be lower than the operating profit growth during the period. We maintain our ACCUMULATE rating on the stock, on back of valuations."

Dr Reddy's Laboratories (CMP: INR 3713/ TP: INR 3963/Upside: 6.7%)

Shares of DR.REDDY'S LABORATORIES LTD. was last trading in BSE at Rs.4065.7 as compared to the previous close of Rs. 3907.55. The total number of shares traded during the day was 55657 in over 6132 trades.

The stock hit an intraday high of Rs. 4084.95 and intraday low of 3960. The net turnover during the day was Rs. 224480008.

Source : Equity Bulls

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