1QFY2017 Result Update | Pharmaceutical

July 29, 2016

Dr Reddy’s Laboratories

NEUTRAL

CMP

`2,988

Performance Highlights

Target Price

Y/E March (` cr)

1QFY2017 4QFY2016

% chg (qoq) 1QFY2016

% chg (yoy)

Investment Period

Net sales

3,235

3,756

(13.9)

3,758

(13.9)

Gross profit

2,121

2,431

(12.7)

2,482

(14.5)

Stock Info

Operating profit

477

844

(43.5)

946

(49.6)

Sector

Pharmaceutical

Adj. net profit

126

376

(66.5)

625

(79.8)

Market Cap (` cr)

51,011

Source: Company, Angel Research

Net Debt (` cr)

(396)

For 1QFY2017, Dr Reddy’s Laboratories (DRL) posted a poor set of numbers. It

Beta

0.7

posted sales of `3,235cr V/s `3,900cr expected and V/s `3,758cr in 1QFY2016,

52 Week High / Low

4,383/2,750

a yoy de-growth of 14.0%. The company’s sales will continue to be under

Avg. Daily Volume

44,327

pressure owing to the likelihood of all its major markets posting a muted growth.

Face Value (`)

Lower sales led to a soft EBIT margin of 3.4% V/s 15.6% expected and V/s 20.2%

BSE Sensex

28,024

in 1QFY2016. Other income came in at ~`61cr V/s `34cr in 1QFY2016. The net

Nifty

8,616

profit for the quarter stood at `126cr V/s `520cr expected and V/s `626cr in

Reuters Code

REDY.BO

1QFY2016, posting a yoy de-growth of 79.8%. We maintain our Neutral rating

Bloomberg Code

DRRD@IN

on the stock.

A subdued quarter: DRL posted a poor set of numbers for the quarter. It posted

Shareholding Pattern (%)

sales of `3,235cr V/s `3,900cr expected and V/s `3,758cr in 1QFY2016, a yoy

Promoters

26.4

de-growth of 14.0%. The generic business (`2,663.8cr) posted a yoy de-growth of

MF / Banks / Indian Fls

8.7

14.0% owing to USA, Europe and Emerging Markets posting a de-growth of 16%,

FII / NRIs / OCBs

56.5

16% and 26% yoy respectively. The Indian market on the other hand posted a yoy

Indian Public / Others

8.4

growth of 10.0% yoy. The PSAI segment (`469.2cr) posted a de-growth of 16%

yoy while proprietary products and others posted a flat yoy growth of 1.0% to

`101.5cr. Lower sales led to a soft EBIT margin of 3.4% V/s 15.6% expected and

Abs. (%)

3m 1yr

3yr

20.2% in 1QFY2016. Other income came in at ~`61cr V/s `34cr in 1QFY2016.

Sensex

7.5

1.7

41.9

The net profit for the quarter stood at `126cr V/s `520cr expected and V/s `626cr

Dr Reddy

(4.5)

(22.5)

30.0

in 1QFY2016, posting a yoy de-growth of 79.8%.

Outlook and valuation: We expect net sales to grow at a CAGR of 8.2% to

3-year Daily Price Chart

`18,119cr and adjusted EPS to record a

6.9% CAGR to

`157.8 over

FY2016-18E. We recommend a Neutral rating on the stock given the valuations.

Key financials (IFRS Consolidated)

Y/E March (` cr)

FY2015

FY2016

FY2017E

FY2018E

Net sales

14,819

15,471

16,043

18,119

% chg

12.1

4.4

3.7

12.9

Net profit

2,218

2,001

2,150

2,692

% chg

3.1

(9.8)

7.4

25.2

Adj net profit

2,218

2,357

2,150

2,692

% chg

3.1

6.3

(8.8)

25.2

Source: Company, Angel Research

Adj. EPS (`)

130.2

138.2

126.0

157.8

EBITDA margin (%)

22.2

24.6

23.1

24.7

P/E (x)

23.0

21.6

23.7

18.9

RoE (%)

21.9

19.7

15.7

17.1

RoCE (%)

18.1

18.7

16.0

18.1

P/BV (x)

4.6

4.0

3.5

3.0

Sarabjit Kour Nangra

EV/Sales (x)

3.4

3.3

3.1

2.7

+91 2 39357600 Ext: 6806

EV/EBITDA (x)

15.4

13.2

13.6

11.1

[email protected]

Source: Company, Angel Research; Note: CMP as of July 27, 2016

Please refer to important disclosures at the end of this report

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Exhibit 1: 1QFY2017 performance (IFRS, consolidated)

Y/E March (` cr)

1QFY2017

4QFY2016

% chg (qoq) 1QFY2016

% chg (yoy)

FY2016

FY2015

% chg

Net sales

3,235

3,756

(13.9)

3,758

(13.9)

15,471

14,819

4.4

Other income/(loss)

(234)

(183)

260

Total income

3,296

3,522

(6.4)

3,792

(13.1)

15,287

15,079

1.4

Gross profit

2,121

2,431

(12.7)

2,482

(14.5)

10,262

9,288

10.5

Gross margin (%)

65.6

64.7

66.0

66.3

62.7

SG&A expenses

1,228

1,163

5.6

1,097

11.9

4,570

4,259

7.3

R&D expenses

480

488

(1.6)

439

9.5

1,783

1,745

2.2

EBDITA

477

844

(43.5)

946

(49.6)

3,909

3,284

19.0

EBDITA (%)

14.7

22.5

25.2

25.3

22.2

Depreciation

303

0.0

187.2

62.0

1,034.3

747.4

(75.0)

Interest

PBT

235

307

(23.5)

793

(70.3)

2,691

2,797

(71.7)

Tax

174

(74.5)

172

(74.2)

713

598

19.2

Net Profit

191

133

43.0

621

(69.3)

1,978

2,199

(10.0)

Share of profit/ (loss) in associates

5.9

(100.0)

4.3

22.9

19.5

Reported net profit before exceptional

126

69.0

625

(79.8)

2,001

2,218

(9.8)

Exceptional items (loss) /profit

(431)

(509)

Reported PAT

126

69.0

625

(79.8)

2,001

2,218

(9.8)

Adj. Net Profit

126

376

(66.5)

625

(79.8)

2,357

2,218

6.3

EPS (`)

7.4

22.2

36.8

138.8

130.6

Source: Company, Angel Research

Exhibit 2: Actual Vs Estimates

(` cr)

Actual

Estimates

Variation (%)

Net sales

3,235

3,900

(17.1)

Other income

79.6

Operating profit

477

611

(21.9)

Tax

129

(65.6)

Adj. Net profit

126

520

(75.8)

Source: Company, Angel Research

Revenue lower than expected: For 1QFY2017, Dr Reddy’s Laboratories (DRL)

posted a poor set of numbers. It posted sales of `3,235cr V/s `3,900cr expected

and V/s `3,758cr in 1QFY2016, a yoy de-growth of 14.0%. The company’s sales

will continue to be under pressure owing to the likelihood of all its major markets

posting a muted growth.

The generic business (`2,663.8cr) posted a yoy de-growth of 14.0% owing to USA,

Europe and Emerging Markets posting a de-growth of 16%, 16% and 26% yoy

respectively. The company expects recovery in sales in 2HFY2017 driven by key

approvals including Gleevec. The Indian market on the other hand posted a yoy

growth of 10.0% yoy. Revenue from India was impacted on account of NPPA

pricing notifications and WPI based annual price decline. The company has

successfully integrated UCB brands.

PSAI (`469.2cr) posted a de-growth of 16% yoy while proprietary products and

others posted a flat yoy growth of 1.0% to `101.5cr.

As of June 30, 2016, 78 generic filings are pending approval with the USFDA,

including 50 Para IVs (of which 18 are FTFs).

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Exhibit 3: Trend in Global generics

4,000

3,500

3,000

401

480

270

310

2,500

581

428

476

546

527

2,000

191

212

194

176

522

162

1,500

1,000

1,942

1,852

1,856

1,895

1,552

500

1QFY2016

2QFY2016

3QFY2016

4QFY2016

1QFY2017

Others

Russia & CIS

India

Europe

North America

Source: Company, Angel Research

In the PSAI segment (15% of sales), the US grew by 11% yoy while ROW, Europe,

and India de-grew by 14%, 17% and 44% yoy respectively during the quarter.

Proprietary Products & Others (`102cr) posted a yoy growth of 1%.

Exhibit 4: PSAI trend

700

600

500

208

184

201

147

400

173

300

200

195

259

235

243

195

100

104

1QFY2016

2QFY2016

3QFY2016

4QFY2016

1QFY2017

Others

India

Europe

North America

Source: Company, Angel Research

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

EBITDA margin dips yoy: On the operating front, lower sales led the EBIT of come

in soft at 3.4% V/s 15.6% expected and V/s 20.2% in 1QFY2016. The EBITDA

margin came in at 14.7% V/s 21.3% expected V/s 25.2% in 1QFY2016, hurt by

lower sales and 11.9% yoy growth in SG&A expenses. R&D expenditure for the

quarter amounted to 14.8% of sales V/s 11.7% in 1QFY2016.

Exhibit 5: EBITDA margin trend (%)

32.0

28.6

28.0

25.3

25.2

24.0

22.0

20.0

16.0

14.7

12.0

1QFY2016

2QFY2016

3QFY2016

4QFY2016

1QFY2017

Source: Company, Angel Research

Net profit lower than expected: Other income for the quarter came in at ~`61cr

V/s `34cr in 1QFY2016. The net profit stood at `126cr V/s `520cr expected and

V/s `626cr in 1QFY2016, a yoy de-growth of 79.8%.

Exhibit 6: Adjusted net profit trend

800

722

700

626

579

600

500

376

400

300

200

126

100

1QFY2016

2QFY2016

3QFY2016

4QFY2016

1QFY2017

Source: Company, Angel Research

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Concall takeaways

 DRL expects a recovery in sales in 2HFY2017, driven by key approvals,

including Gleevec.

 The Management expects the Russia business to deliver strong growth going

forward as key tenders are due in 2HFY2017.

 The remediation process is almost over; the company plans to invite the

USFDA in 2QFY2017 for a re-inspection.

 The company incurred a remediation cost of US$16mn in 1QFY2017, which

should substantially come down from 2QFY2017.

 The company incurs 12-15% of its total R&D spends on bio-similar research.

Investment arguments

Robust growth in the US going ahead: After attaining a critical mass (US$1,139mn

in FY2016), DRL aims to scale up its business to the next orbit in the US market on

the back of a strong product pipeline (78 ANDAs are pending approval, of which,

50 are Para IVs and 18 are FTFs). The Management has guided for a robust

growth in the US over the medium term, driven by introduction of new products,

some of which are also Para IV opportunities. Owing to the import alert on the

three facilities of the company, in a worst case scenario, we expect the ex-

exclusivity US sales to post a CAGR of ~7.0% during FY2016-18E.

Domestic back in focus: DRL reported a 19.0% yoy growth in FY2016. The

Management expects the company’s performance to rebound and targets to

achieve an above industry growth rate going ahead, driven by a) field force

expansion and improvement in productivity, b) new product launches (including

biosimilars) and c) focus on brand building. In 4QFY2015, DRL had acquired

UCB’s India portfolio and has completed the integration process of these brands in

1QFY2016. UCB’s India business had registered ~`150cr sales in CY2014 and

has a branded portfolio of

21 products focusing on Allergy, Respiratory,

Dermatology and Pediatric space. The acquisition has been successfully integrated

by 2QFY2016. Thus, we expect sales in India to post a CAGR of ~12.0% over

FY2016-18E.

Valuation: We expect net sales to post a CAGR of 8.2% to `18,119cr and

adjusted EPS to record an 6.9% CAGR to `157.8 over FY2016-18E. The stock has

been severely beaten down post the import alert from the USFDA. Still, considering

the valuations, we recommend a Neutral on the stock.

Exhibit 7: Key assumptions

FY2017E

FY2018E

PSAI segment growth (%)

(0.9)

(0.1)

Generics segment growth (%)

3.9

14.8

Operating margin (%)

23.1

24.7

Capex (` cr)

1200

Source: Company, Angel Research

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Exhibit 8: PE chart

6,000

5,000

4,000

3,000

2,000

1,000

Price

20x

25x

30x

35x

Source: Company, Angel Research

Exhibit 9: Recommendation summary

Company

Reco.

CMP Tgt Price Upside

FY2018E

FY16-18E

FY2018E

(`)

(%)

EV/Sales

EV/EBITDA

CAGR in EPS

RoCE

RoE

(x)

(%)

Alembic Pharma

Neutral

601

24.8

2.6

15.0

(21.2)

23.5

21.3

Aurobindo Pharma Accumulate

794

877

10.5

16.9

2.8

11.7

18.1

22.5

26.1

Cadila Healthcare Accumulate

358

399

11.4

18.6

2.8

12.5

15.8

24.3

26.6

Cipla

Neutral

524

19.3

2.5

13.3

20.4

13.5

15.2

Dr Reddy's

Neutral

2,988

24.7

3.0

11.1

6.9

18.1

17.1

Dishman Pharma Sell

147

(43.5)

13.8

1.5

7.0

(1.1)

9.6

10.2

GSK Pharma*

Neutral

3,404

52.1

7.2

37.5

21.6

35.8

31.8

Indoco Remedies

Sell

315

225

(28.6)

20.2

2.3

12.5

31.5

19.1

19.2

Ipca labs

Buy

495

613

23.8

17.4

1.8

9.7

17.9

11.8

14.9

Lupin

Buy

1,717

1,809

5.4

24.8

4.0

15.0

17.2

24.4

20.9

Sanofi India

Neutral

4,582

29.9

3.4

19.5

21.2

24.9

28.4

Sun Pharma

Buy

803

944

17.6

24.5

5.0

16.0

22.0

33.1

18.9

Source: Company, Angel Research; Note: *December year ending

Company Background

Established in

1984, Dr Reddy's Laboratories is an integrated global

pharmaceutical company, through its three businesses - Pharmaceutical Services

and Active Ingredients, Global Generics and Proprietary Products. The company’s

key therapeutic focus is on gastro-intestinal, cardiovascular, diabetology,

oncology, pain management, anti-infective and paediatrics. The company’s key

markets include India, USA, Russia & CIS, and Germany.

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Profit & loss statement (IFRS Consolidated)

Y/E March

FY2013

FY2014

FY2015

FY2016

FY2017E

FY2018E

Net sales

11,627

13,217

14,819

15,471

16,043

18,119

Other operating income

247.9

141.6

91.7

87.4

Total operating income

11,875

13,359

14,911

15,558

16,130

18,207

% chg

21.8

12.5

11.6

4.3

3.7

12.9

Total expenditure

8,951

10,096

11,535

11,669

12,341

13,642

Cost of revenues

4,825

4,977

5,531

5,315

5,812.02

6,267.44

SG&A expenses

3,358

3,878

4,259

4,570

4,604

5,200

R&D expenses

767.3

1,240.2

1,744.9

1,783.4

1,925.1

2,174.3

EBITDA

2,676

3,121

3,284

3,802

3,701

4,477

% chg

3.0

16.6

5.2

15.8

-2.6

21.0

(% of Net Sales)

23.0

23.6

22.2

24.6

23.1

24.7

Depreciation & amortisation

743.7

659.8

747.4

927.4

990.1

1,052.8

EBIT

1,932

2,462

2,537

2,875

2,711

3,425

% chg

4.3

27.4

3.1

13.3

-5.7

26.3

(% of Net Sales)

16.6

18.6

17.1

18.6

16.9

18.9

Interest & other charges

Other Income

46.0

40.0

168.2

(270.8)

(% of PBT)

2.1

1.5

6.0

(10.0)

Share in profit of associates

10.4

17.4

19.5

22.9

Recurring PBT

2,237

2,661

2,816

2,714

2,822

3,535

% chg

14.7

19.0

5.9

-3.6

4.0

25.3

Extraordinary expense/(Inc.)

68.8

508.5

PBT (reported)

2,167.7

2,660.6

2,816.3

2,714.0

2,821.5

3,534.9

Tax

490.0

509.4

598.4

712.7

671.7

842.9

(% of PBT)

22.6

19.1

21.2

26.3

23.8

PAT (reported)

1,677.7

2,151.2

2,217.9

2,001.3

2,149.9

2,692.0

Add: Share of earnings of asso.

Less: Minority interest (MI)

Exceptional items

PAT after MI (reported)

1,677.7

2,151.2

2,217.9

2,001.3

2,149.9

2,692.0

ADJ. PAT

1,750.0

2,151.2

2,217.9

2,357.0

2,149.9

2,692.0

% chg

17.0

22.9

3.1

6.3

(8.8)

25.2

(% of Net Sales)

14.4

16.3

15.0

12.9

13.4

14.9

Basic EPS (`)

103.1

126.7

130.2

138.2

126.0

157.8

Fully Diluted EPS (`)

103.1

126.7

130.2

138.2

126.0

157.8

% chg

16.8

22.9

2.7

6.1

(8.8)

25.2

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Balance sheet (IFRS Consolidated)

Y/E March (` cr)

FY2013

FY2014

FY2015

FY2016

FY2017E FY2018E

SOURCES OF FUNDS

Equity share capital

84.9

85.2

85.3

Preference Capital

Reserves & surplus

7,224

8,995

11,045

12,748

14,949

17,515

Shareholders funds

7,309

9,080

11,130

12,834

15,034

17,600

Minority Interest

Total loans

3,676.0

4,474.2

3,954.3

3,661.9

Deferred tax liability

83.3

(192.9)

(401.3)

(423.0)

Total liabilities

11,068

13,361

14,683

16,073

18,273

20,839

APPLICATION OF FUNDS

Net fixed assets

3,781

3,945

4,314

5,396

6,596

7,796

Goodwill /other intangibles

1,402

1,470

1,643

1,969

Capital Work-in-Progress

495.2

Investments

1,764

2,589

3,811

3,833

Current Assets

6,875

7,866

8,558

8,465

10,087

12,149

Cash

513.6

845

539

492

660

1,358

Loans & Advances

697.6

793.0

889.1

928.2

1,048.8

1,201.3

Other

5,664

6,228

7,129

7,045

8,378

9,590

Current liabilities

3,252

3,006

4,214

4,193

4,813

5,510

Net Current Assets

3,623

4,860

4,344

4,273

5,273

6,639

Other Assets

106

Total Assets

11,068

13,361

14,683

16,073

18,273

20,839

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Cash flow statement (IFRS Consolidated)

Y/E March (` cr)

FY2013

FY2014

FY2015

FY2016

FY2017E FY2018E

Profit before tax

2,237

2,661

2,816

2,714

3,414

3,894

Depreciation

744

660

747

927

990

1,053

(Inc)/Dec in Working Capital

535

(906)

211

(833)

(668)

Less: Other income

168

(271)

Direct taxes paid

490

509

598

713

814

929

Cash Flow from Operations

2,980

1,865

3,008

3,224

2,758

3,350

(Inc.)/Dec.in Fixed Assets

(431)

(164)

(369)

(1,082)

(1,200)

(Inc.)/Dec. in Investments

687

824

1,222

Other income

168

(271)

Cash Flow from Investing

302

701

1,021

(1,331)

(1,200)

Issue of Equity

Inc./(Dec.) in loans

(1,155)

798

(520)

(292)

Dividend Paid (Incl. Tax)

298

358

399

Others

(2,649)

(3,390)

(4,214)

(2,047)

(1,789)

(1,851)

Cash Flow from Financing

(3,506)

(2,234)

(4,335)

(1,940)

(1,389)

(1,452)

Inc./(Dec.) in Cash

(224)

331

(306)

(47)

168

698

Opening Cash balances

738

514

845

539

492

660

Closing Cash balances

514

845

539

492

660

1,358

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Key ratios

Y/E March

FY2013

FY2014

FY2015

FY2016

FY2017E

FY2018E

Valuation Ratio (x)

P/E (on FDEPS)

29.0

23.6

23.0

21.6

23.7

18.9

P/CEPS

21.0

18.0

17.2

17.4

16.2

13.6

P/BV

6.9

5.6

4.6

4.0

3.5

3.0

Dividend yield (%)

0.5

EV/Sales

4.5

3.9

3.4

3.3

3.1

2.7

EV/EBITDA

19.5

16.6

15.4

13.2

13.6

11.1

EV / Total Assets

4.7

3.9

3.4

3.1

2.8

2.5

Per Share Data (`)

EPS (Basic)

103.1

126.7

130.2

138.2

126.0

157.8

EPS (fully diluted)

103.1

126.7

130.2

138.2

126.0

157.8

Cash EPS

142.6

165.5

174.0

171.7

184.1

219.5

DPS

15.0

Book Value

430.4

534.7

653.3

752.3

854.9

989.3

Dupont Analysis

EBIT margin

16.6

18.6

17.1

18.6

16.9

18.9

Tax retention ratio

77.4

80.9

78.8

73.7

76.2

Asset turnover (x)

1.2

1.1

1.0

ROIC (Post-tax)

14.9

17.4

15.1

14.3

12.7

14.5

Cost of Debt (Post Tax)

0.0

Leverage (x)

0.6

0.4

0.3

0.2

Operating ROE

23.5

24.7

20.4

18.3

15.6

17.1

Returns (%)

ROCE (Pre-tax)

17.8

20.2

18.1

18.7

16.0

18.1

Angel ROIC (Pre-tax)

23.1

25.6

22.5

22.9

19.4

21.9

ROE

26.8

26.3

21.9

19.7

15.7

17.1

Turnover ratios (x)

Asset Turnover (Gross Block)

3.3

3.5

3.6

3.2

2.7

2.5

Inventory / Sales (days)

Receivables (days)

Payables (days)

WC cycle (ex-cash) (days)

104

Solvency ratios (x)

Net debt to equity

0.4

0.3

0.2

0.1

Net debt to EBITDA

1.2

1.0

0.8

0.6

Interest Coverage (EBIT / Int.)

July 29, 2016

Dr. Reddy’s Laboratories | 1QFY2017 Result Update

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

DISCLAIMER

Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,

Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL

and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a

registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number

INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing

/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public

offering of securities of the company covered by Analyst during the past twelve months.

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment

decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should

make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the

companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine

the merits and risks of such an investment.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the

contrary view, if any.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable

sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this

document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way

responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.

Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot

testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.

While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be

regulatory, compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from

or in connection with the use of this information.

Disclosure of Interest Statement

Dr. Reddy’s Laboratories

1. Financial interest of research analyst or Angel or his Associate or his relative

2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives

3. Served as an officer, director or employee of the company covered under Research

4. Broking relationship with company covered under Research

Ratings (Based on expected returns

Buy (> 15%)

Accumulate (5% to 15%)

Neutral (-5 to 5%)

over 12 months investment period):

Reduce (-5% to -15%)

Sell (< -15)

July 29, 2016