Maintain 'buy' rating on Dr. Reddy's – TP hiked to Rs.1803 - Geojit BNP Paribas

- Doubts regarding the growth prospects of the company beyond FY13 look unwarranted.

- Many growth levers even beyond FY13 in the form of limited competition, complex generic products in the US, Russia and in India; biosimilars and proprietary products ensure growth of the company even beyond FY13.

- It seems that execution remains the key over the next few years. Though the execution record of the company in India is not very good, the company has delivered well on monetizing limited competition opportunities in the US. It has also scaled up operations in Russia. The potential of its biosimilars pipeline is yet to be realized fully.

- All these are growth opportunities even beyond FY13.

- In the medium term, it seems that the earnings momentum should remain strong and the earnings estimates for FY13 has been increased by 6% on higher sales in the US and rupee depreciation against the USD.

- It is expected that core earnings of the company would grow at a strong CAGR of 27.7% over FY11-14.

- Based on these estimates, target price of the company has been revised to Rs.1803 over one year from the earlier estimate of Rs.1677 and the 'buy' rating on the scrip is maintained.

Source : Equity Bulls

Keywords