Nomura has maintained its 'Buy' rating and target price of ₹1,740 on Dr Reddy's Laboratories ahead of its September-quarter results on October 23. According to Nomura's October 21 research note titled "Q2FY27F Poised for QoQ Operational Gains," the brokerage's target price is based on 24 times one-year forward earnings per share of ₹72.6. The stock closed at ₹1,245 on October 21 and trades at 18 times and 15 times FY28 and FY29 estimated earnings per share of ₹69 and ₹82, respectively.
Nomura forecasts an EBITDA margin of 18.1% for the quarter, compared with 14.3% in the first quarter of FY27 on an adjusted basis. The brokerage's sales, EBITDA and profit-after-tax estimates are 1.4%, 23.1% and 20.7% above consensus, respectively. As reported by Nomura, the quarter is expected to be the third without a material contribution from gRevlimid, with North America generics sales improving sequentially on a relatively low base, supported by launches of generic Bosulif and Sugammadex. The brokerage expects the quarter to show sequential improvement in revenue and profitability, while EBITDA margin remains below 20%.
Dr Reddy's has gained 71% market share in the 400mg generic Bosulif segment as of August 2026, according to IQVIA, while its market share in generic Sugammadex stood at 16%. According to Pharmarack, the company recorded 13.7% year-on-year growth in the Indian Pharma Market for the quarter ended September 2026. Growth in Russia is likely to remain strong, supported by favourable currency movements, while constant-currency growth is expected to remain in the mid-single digits. The brokerage expects the company to sustain mid-teen growth in India after recording 13.7% year-on-year growth in the Indian Pharma Market for the quarter ended September 2026.
Nomura expects the commercial supplies of semaglutide to commence in November 2026, with management guiding for sales of 6-7 million pens in the second half of FY27, which Nomura expects to generate more than $100 million in revenue. The brokerage noted that management's commentary on resumption of commercial supplies of semaglutide will be closely monitored, with the company indicating that the project to address the impurity in the scale-up batch is on track. The brokerage also expects the market to monitor the potential USFDA approval of biosimilar abatacept intravenous formulation, with a target action date of December 18, 2026. As reported by Nomura, "We expect the approval and launch of biosimilar abatacept will be a significant positive catalyst for the stock." The approval and launch, if materialised, could positively impact FY28 and FY29 earnings by approximately 30%, with the upside potentially sustained due to limited competition.
