Dr. Reddy’s Laboratories (DRRD IN) – Event Update – Temporary supply disruption of Semaglutide – Accumulate
Published on 10 Jul 2026
DRRD’s gets temporary setback with stoppage of Semaglutide supplies due to impurity issues associated with API. Company expect issue to get resolved by Oct/Nov 2026; any delay in re-entry into markets like Canada can take away first mover advantage. Our FY27E stands cut by 5% while FY28E largely remains unchanged. We have factor in USD 180mn of sales from Sema in FY28.
Company has been reporting OPM at 15-16% ex gRevlimid. Scale up in Sema along with reducing opex will be key to achieved 19-20% OPM. Further timely launches like bAbatacept can accelerate profitability from H2FY28E. We maintain our Accumulate rating on stock with TP of 1400/share (23x FY28E EPS). DRRD have been investing cash flow from gRevlimid to build pipeline across peptides, biosimilars and GLP products; benefits of that should be visible from FY27. At CMP, DRRD is trading at valuations of 21x P/E on FY28E. Delay in re-entry of Semaglutide beyond H2FY27 will be key risk to our call.
