Dr. Reddy‘s Labs: Miss and margin pressures persist; Semaglutide/Abatacept timing key

Research evidence excerpt

Dr. Reddy‘s Labs: Miss and margin pressures persist; Semaglutide/Abatacept timing key

Bansi Desai, CFA AC Asia Pacific Equity Research

(91 22) 6157 3581 23 July 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 ~20% to FY28/29 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 -5.6% -8.4% -2.8% -4.6% contribution from the India branded business (acute heavy),

Rel 2.6% -7.9% -1.2% -0.4%

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) 1,414.90-1,148.40

Market cap ($ mn) 10,258 Valuation

Exchange rate 96.24 Our Sep-27 PT of Rs1,100 is based on a target P/E of 22x Sep-

Free float (%) 48.1%

3M ADV (mn) 2.67 28E EPS. Our target multiple for Dr. Reddy’s is in line with peers

3M ADV ($ mn) 36.2 such as Cipla and 10-15% lower than Lupin, which has a higher

Volatility (90 Day) 29 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 FY26A FY27E FY28E FY29E

Financial Estimates

Revenue 335,933 360,287 404,902 447,515

Adj.