Dr. Reddy's: 4Q is the trough with core earnings momentum getting stronger

研报英文原文证据摘录

Dr. Reddy's: 4Q is the trough with core earnings momentum getting stronger

Accessible version

Dr. Reddy's

4Q is the trough with core earnings

momentum getting stronger

Reiterate Rating: BUY | PO: 1,540 INR | Price: 1,270 INR

Wading through the one-offs in 4Q – Inline qtr 12 May 2026

DRRD’s headline EBITDA at Rs9.5bn (12.6%) had several one-offs including shelf-stock Equity

adj for gRevlimid ($50Mn), certain provisions, sale of non-core products & discontinued

R&D impact. Adj EBITDA was at Rs13.4bn implying 17% margins, which was in line with

Key ChangesBofAe but below consensus at Rs15bn. We believe the base business margins of 17%

excluding gRevlimid is higher than initial street fear of low teen margins reflecting the (Rs) Previous Current

operating leverage from ex-US business in the last few qtrs. While ex-US momentum 2027E Rev (m) 368,145.8 363,983.8

will continue to aided by India/EMs, we believe launch of Sema in Canada from 1QFY27 2028E Rev (m) 402,035.2 404,608.0

and rollout in other EMs over the year should drive higher margins (BofAe 21% in FY27). 2029E Rev (m) NA 432,435.8

2027E EPS 58.17 55.56

2028E EPS 70.07 70.16Sema traction key to watch for upside

Sema approval in Canada (launch likely soon) along with traction in India should reflect in 2029E EPS NA 75.54

1QFY27 with supplies ramping up with approval in other markets (50 markets by CY26

end). However, the delay in Brazil approval has meant DRRD lowering the Sema volume Neha Manpuria >>

Research Analyst

guidance from 12Mn for FY27 previously to 12Mn over the next 12months (i.e. ~10- BofAS India

11Mn in FY27). We estimate 5-8Mn units pa for sema in FY27-28 and therefore, the +91 22 6632 8307 neha.manpuria@bofa.com

traction in launches across EMs as well as uptake in Canada being key for margins. While