Range
Stop Loss
Target
Dr. Reddys (NSE Cash) - Buy
3,180 - 3,150
2,940
3,620
Weekly Chart
Technical Evidences
This one of the outperforming stocks in the
‘Pharmaceutical’ space had undergone a
severe price correction in the month of
November 2015.
This was followed by some consolidation
around the 50% retracement level of the
entire up move from
`1355.64
to
`4386.60. This level coincides with ‘200
EMA’ on weekly chart and thus, can be
considered as a strong support zone.
In addition, a ‘Dragonfly Doji’ pattern
formed on monthly chart is now getting
activated.
Considering the positive placement of ‘RSI
- smoothened’ oscillator and ‘PSAR’
indicator on weekly chart, we expect this
stock to give a decent up move in the
medium term.
Thus,it can be bought from current level to
a decline up to `3150 for a target of
`3620 in coming three months. A stop
loss can be placed at ` 2940 on a closing
basis.
Source: Falcon ( Chart time: 14.15 IST )
March 03, 2016
Stock Info
Dr. Reddys
Robust growth in the US, going ahead: After attaining a critical mass
Sector
Pharmaceuticals
(US$1,113mn in FY2015), DRL aims to scale up its business to the next orbit in
the US market on the back of a strong product pipeline (76 ANDAs are pending
Market cap
54,301
approval, of which, 50 are Para IVs and 18seven are FTFs). The Management
has guided for a robust growth in the US over the medium term, driven by
Beta
0.7
introduction of new products, some of which are also Para IV opportunities.
On back of the import alert on the three facilities of the company, on worst case
52 week high/low
4,383/2,750
scenario, we expect the ex-exclusivity US sales to post a CAGR of ~15.7% during
FY2015-17E
Avg. Daily Volume
10,612
Domestic back in focus: The Management expects the company’s performance to
rebound and targets to achieve an above Industry growth rate going ahead,
Face Value (`)
5
driven by a) field force expansion and improvement in productivity, b) new
product launches (including biosimilars) and c) focus on brand building.
Outlook: We expect net sales to report a grow at a CAGR of 14.9% CAGR to
`19,575 cr and adjusted EPS to record a 17.2% CAGR to `178.8 over FY2015-
Shareholding Pattern (%)
17E. The stock has seen severe beating post the import alert from the USFDA.
On back of considering the attractive valuations, we recommend a Buy rating on
the stock.
Promoters
25.6
MF / Banks / Indian Fls
5.7
Company
Sales
OPM PAT
EPS
ROE
ROCE
P/BV
P/E
(` cr)
(%)
(` cr)
(`)
(%)
(%)
(x)
(x)
FII / NRIs / OCBs
55.9
FY2016E
16,838
25.0
2,854
167.5
23.1
20.6
3.8
18.0
Indian Public / Others
12.8
FY2017E
19,575
23.1
3,046
178.8
20.4
19.1
3.2
16.9
March 03, 2016
Research Team Tel: 022 - 3935 7800
E-mail: [email protected]
Website: www.angelbroking.com
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Disclosure of Interest Statement
Dr.Reddys
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors.
March 03, 2016