Dr Reddy‘s Laboratories (DRRD IN): Buy: All eyes on the roadmap for margin recovery

Research evidence excerpt

Dr Reddy‘s Laboratories (DRRD IN): Buy: All eyes on the roadmap for margin recovery

Equities ● Pharmaceuticals

23 July 2026

Financials & valuation: Dr Reddy's Laboratories Buy

Financial statements Valuation data

Year to 03/2026a 03/2027e 03/2028e 03/2029e Year to 03/2026a 03/2027e 03/2028e 03/2029e

Profit & loss summary (INRm) EV/sales 2.9 2.7 2.4 2.1

Revenue 335,933 352,771 404,075 440,083 EV/EBITA 17.2 22.2 14.4 11.5

EBITA 56,264 43,006 66,277 80,108 EV/IC 2.9 2.8 2.5 2.4

Amortisation -7,985 -8,290 -8,890 -9,682 PE* 22.6 30.1 19.9 16.6

Operating profit/EBIT 48,279 34,716 57,387 70,426 PB 2.6 2.5 2.3 2.0

Net interest 4,132 4,700 4,747 4,794 FCF yield (%) 1.6 0.7 -0.1 2.8

PBT 54,817 40,441 65,634 78,774 Dividend yield (%) 0.7 0.8 1.0 1.1

HSBC PBT 54,817 40,441 65,634 78,774 * Based on HSBC EPS (diluted)

Taxation -12,352 -9,789 -16,408 -19,693

Net profit 42,850 31,002 49,575 59,430

HSBC net profit 43,682 32,691 49,575 59,430 ESG metrics

Cash flow summary (INRm) Environmental Indicators 03/2025a Governance Indicators 03/2026a

Cash flow from operations 38,814 28,577 23,309 55,359 GHG emission intensity* 61.9 No. of board members 10

Capex -23,326 -22,000 -24,000 -28,000 Energy intensity* 344.3 Average board tenure (years) 9.8

Cash flow from investment -65,513 -22,000 -24,000 -28,000 CO2 reduction policy Yes Female board members (%) 30

Dividends -6,659 -10,000 -12,000 -14,000 Social Indicators 03/2025a Board members independence (%) 80

Change in net debt -193 -12,726 -3,014 -29,992

Employee costs as % of revenues 17.2FCF equity 15,488 6,577 -691 27,359

Balance sheet summary (INRm) Employee turnover (%) 19.2

Diversity policy Yes

Intangible fixed assets 117,952 109,662 100,772 91,090

Tangible fixed assets 115,930 123,819 132,464 144,181 Source: Company data, HSBC