In an analysis published Friday, Motilal Oswal analyst Prashant Waghpanje provided a comprehensive view of Dr. Reddy’s Labs. Waghpanje highlighted the company’s strategic investments in tangible and intangible assets, but also pointed out some potential challenges that could affect the company’s performance.
The Dr. Reddy’s Labs Analyst: Motilal Oswal analyst Prashant Waghpanje has maintained Neutral rating on the stock with a price target of ₹4,680, indicating a downside of 7.4% from the current market price.
The Dr. Reddy’s Labs Thesis: Waghpanje noted that Dr. Reddy’s Labs has made significant investments to cater to its manufacturing needs.
However, the company’s growth in the Domestic Formulation (DF) segment has moderated year-over-year.
A concern raised by Waghpanje is the company’s operations in Russia. Given the geopolitical tensions and economic sanctions on Russia, the company’s operations in the country stand affected.
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Waghpanje said he expects just a 6% earnings compound annual growth rate over FY23-25 compared to the 31% earnings CAGR over FY21-23, maintaining the “Neutral” rating as the upside is capped at current valuations.
Price Action: Dr. Reddy’s Labs shares hit 52-week-high in regular trading early Tuesday at ₹5,086.55. The analyst’s view suggests there could be no further upside to the stock.
The pharma stock moderated somewhat by the time of writing, still trading 0.28% higher for the day at ₹5,055.5.
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