Dr. Reddy's Labs Semaglutide & Abatacept priced-in; competition and execution risks tilt downside

Research evidence excerpt

Dr. Reddy's Labs Semaglutide & Abatacept priced-in; competition and execution risks tilt downside

Bansi Desai, CFA AC Asia Pacific Equity Research

(91 22) 6157 3581 13 May 2026 J P M O R G A N

bansi.desai@jpmorgan.com

Price Performance Summary Investment Thesis and Valuation

Investment Thesis

We remain cautious on Dr. Reddy’s Laboratories as key growth

drivers post gRevlimid cliff - Semaglutide performance in

Canada faces risk of incremental competition and Abatacept in

the US faces regulatory and execution risk. We expect both

products to contribute 10-12% to FY27/28 estimates, and any

approval delay may pose earnings risk. While the uptick in

growth in ex-US markets is encouraging, margin gains don’t

appear sustainable due to forex benefits. Trading at a premium

to Cipla and Lupin, the risk-reward is unattractive, especially

YTD 1m 3m 12m given Dr. Reddy’s inferior business mix, which has lower

Abs 1.3% 3.1% -0.4% 6.2% contribution from the India branded business (acute heavy),

Rel 11.9% 5.9% 9.0% 12.4%

higher exposure to US generics (low visibility of high-value

Company Data launches), and higher exposure to the low-growth PSAI

Shares O/S (mn) 835 segment.

52-week range (Rs) 1,379.70-1,143.05

Market cap ($ mn) 11,122 Valuation

Exchange rate 95.31 Our Mar-27 PT of Rs1,200 is based on a target P/E of 22x Mar-

Free float (%) 48.1%

3M ADV (mn) 2.27 28E EPS. Our target multiple for Dr. Reddy’s is in line with peers

3M ADV ($ mn) 30.6 such as Cipla and 10-15% lower than Lupin, which has a higher

Volatility (90 Day) 30 contribution of revenues from the India branded market.

Index NIFTY

BBG ANR (Buy | Hold | Sell) 18|10|13

Key Metrics (FYE Mar) Performance Drivers

Rs in millions FY25A FY26E FY27E FY28E

Financial Estimates

Revenue 324,269 340,463 361,977 401,328

Adj.