Dr. Reddy's: From gRevlimid noise to normalization

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Dr. Reddy's: From gRevlimid noise to normalization

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Dr. Reddy's

From gRevlimid noise to normalization

Reiterate Rating: BUY | PO: 1,540 INR | Price: 1,269 INR

Post gRevlimid era – What are we missing? 18 June 2026

In our view, Dr Reddy’s underperformance overlooks a clear improvement in base Equity

business momentum and the Sema Canada approval. Post the 4Qadj margin at 17%,

Neha Manpuria >>

concerns around ex-gRevlimid margin deteriorating appear addressed. Operating Research Analyst

leverage from base business growth, disciplined cost control (with scope to reduce BofAS India neha.manpuria@bofa.com

discretionary spend) and normalization of R&D investments should support 20+%

Charul Agrawal >>

margins even without sema. While sema and abatacept provide incremental upside in Research Analyst

FY27/28, we believe the sustained base business strength with improving margins and BofAS India charul.agrawal2@bofa.com

lower dependence on US Gx is not reflected in current valuations of 18x FY28E P/E.

Reiterate Buy.

Why ignore base business growth? Stock Data

While the gRevlimid cliff is well known, concerns around base business have been Price (Common / ADR) 1,269 INR / 13.19 USD

addressed by the improvement in ex-US growth to 15% in FY26 excluding NRT vs. 7- Price Objective 1,540 INR / 16.70 USD

10% in FY24-25. The broad-based growth was aided by traction in the in-licensed Date Established 16-Apr-2026 / 12-May-2026

portfolio in India, 15% CC growth in Russia & positive momentum in EMs that should Investment Opinion B-1-7 / B-1-7

continue in FY27-28. Further, NRT growth is also tracking ahead of expectations post 52-Week Range 1,148 INR-1,376 INR

integration, with the opportunity expanding beyond smoking cessation to broader Market Value (mn) 11,201 USD