Shares of Dr Reddy’s Laboratories – a pharmaceutical major – were hammered by the Street during Thursday’s session on the exchanges despite registering robust set of earnings in March quarter.
Dr Reddy’s shares tumbled as much as 6.6 per cent to hit the day’s low level of Rs 4,545 apiece; the stock opened below flatline and was trading at Rs 4,567.2 a share at around 11: AM on the BSE. The counter was a top laggard on the Nifty50 index today.
The pharma company reported a consolidated net profit of Rs 960.1 crore for the quarter ended on March 31, 2023, implying a jump of 890 per cent or almost nine times year-on-year (YoY) from Rs 97 crore reported in the same quarter of last year, according to a regulatory filing.
Its revenue from operations grew by 15.28 per cent YoY in the March quarter of FY23 to Rs 5,843 crore from Rs 5,068.4 crore in the year-ago quarter.
The Street dumped Dr Reddy’s shares amid multiple reasons including brokerages’ mixed view on the stock, Zee Business analyst Nupur Jainkunia also noted that the company has reported numbers with, “too many adjustments and there was a big miss on adjusted numbers.”
However, she was of the view that Dr. Reddy’s reported numbers were briefly in line with estimates, the same view was also echoed by Macquarie, which said the Q4 was largely similar to its expectations and, maintained an ‘outperform’ rating on the stock with a target of Rs 5,250 apiece.
On the contrary, Goldman Sachs has maintained a ‘neutral’ stance on Dr Reddy’s with a ‘reduced’ target of Rs 4,750 from Rs 4,840 as it believes the pharma major reported a weak quarter and management upbeat of medium-term prospects.
Similarly, Nomura said the Q4 numbers were below estimates with respect to the top and bottom lines, however, maintained a ‘buy’ rating on Dr Reddy’s with a target of Rs 5,161 apiece.
Domestic brokerage firm Kotak Institutional Equities in its report said Dr Reddy’s delivered an operating miss in 4QFY23 due to lower sales across markets, barring Europe, as well as higher marketing and R&D costs.
At current valuations, the brokerage believes the healthy non-US outlook is factored in and downgraded the stock to ‘reduce’ with a target of Rs 4,700 per share.
Dr Reddy’s shares in the last one year have jumped over 17 per cent, while it has gained around 7.5 per cent year-to-date.
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