Dr. Reddy's Laboratories shares are up for the third consecutive session, trading at ₹1,243 with a 1.8% gain as of 12:49 IST on Tuesday, according to Business Standard. The stock has gained 7.67% in the past month and is up 1.58% over the last year, significantly outperforming the 7.89% decline in NIFTY and 25.3% slide in the Nifty Pharma index. The stock hit an intraday high of ₹1,247.70 following a significant upgrade from global brokerage Citi. The benchmark September futures contract is quoting at ₹1,241.9, up 1.45% on the day, while the stock's PE ratio stands at 153.77 based on TTM earnings ending June 26. Trading volume was 34.38 lakh shares today, compared to the daily average of 14.98 lakh shares in the last month, indicating increased investor interest.
As reported by CNBC TV18, Citi cited improving earnings visibility, strong execution in non-US markets and potential margin expansion as key drivers for their bullish stance. The brokerage expects the stock to recover on the back of Abatacept US launch and the resumption of Semaglutide Canada supply. Citi believes there are sufficient catalysts for recovery post the gRevlimid cliff, with the company's EBITDA margin expected to rise from 14% in FY27 to 20% in FY29. The margin expansion is anticipated to be driven by operating leverage along with cost initiatives and new launches. According to CNBC TV18, of the 42 analysts who have coverage on the Dr Reddy's Laboratories stock, 17 have a 'buy' rating, 10 have a 'hold' rating and 15 have a 'sell' rating.
According to CNBC TV18, Citi expects the Abatacept biosimilar (US) and Semaglutide Canada in its portfolio to add $350 million to $400 million to the company's topline over FY27-FY29. The brokerage sees the company's Model North America revenue at $900 million, excluding Abatacept and Semaglutide. The potential launch of Abatacept and Semaglutide could contribute 400 to 500 basis points to the company's revenue. Citi thinks that India, emerging markets, and Europe growth will support a better business mix toward more sustainable earnings streams. As reported by CNBC TV18, the brokerage believes that improving growth in India, EMs and Europe is driving a favorable shift in business mix toward more sustainable earnings streams.
As reported by CNBC TV18, following the likely triggers, Citi raised FY27 EPS estimates by 2%, FY28 by 5%, and FY29 by 19%. The company's consolidated gross profit margin was 46.5% in Q1FY27, showing a decrease of 1,039 basis points YoY and an increase of 169 basis points sequentially. According to M. V. Narasimham, Chief Financial Officer of Dr. Reddy's Lab, the margin decline was largely due to lower lenalidomide sales, semaglutide API related provision, and higher solvent costs due to the Middle East conflict. Citi is also bullish on the company's margins, estimating a 150 basis point margin expansion from operating leverage and cost initiatives.
Dr Reddy's Laboratories received a penalty of $32,350.20 from the US Internal Revenue Service (IRS) over misclassification of the fiscal year reference at the time of tax payment. According to the company, DRL Inc received the final transcript dated September 25, 2026, from the US Department of the Treasury, Internal Revenue Service, Cincinnati, Ohio, on October 2, 2026. The company stated that based on its evaluation, there is no material impact on the company's financials, operations or other activities. Additionally, on September 11, the USFDA completed a records assessment at Dr Reddy's Mexico facility with two observations issued at the conclusion of the assessment conducted from July 17 to September 8, 2026. The company will respond to the observations within the stipulated timeline.
