Dr. Reddy’s Laboratories (DRRD IN) – Q3FY26 Result Update – Timely launch of Sema across markets remain key – REDUCE
Published on 22 Jan 2026
Dr. Reddy’s (DRRD) Q3FY26 reported EBITDA was in line with our estimates. The base business margins and US sales ex of gRevlimid continued to remain weak. On positive side, domestic and Russia sales reported strong growth. We have scale up base business margins from the current level of 17-18% to ~21% in FY27E. Our FY27 and FY28E EPS broadly remain unchanged. DRRD have been investing cash flow from gRevlimid to build pipeline across peptides, biosimilars and GLP products; benefits of that may take some time. Further any delay in getting approval for Sema in Canada remains a key risk. At CMP, DRRD is trading at valuations of 21.5x P/E on FY27E and factors in recovery in base business margins. We maintain our ‘Reduce’ rating with TP of Rs1,300/share; valuing at 23x Sept 2027E EPS. Any big ticket ANDA approvals and sharp scale up in Semaglutide opportunity are key risks to our call.
