Dr. Reddy’s Earnings: Year-End Numbers Look Solid as Demand and Prescription Trends Remain Resilient

No-moat Dr. Reddy’s reported strong fourth-quarter earnings and ended the year on solid footing. Revenue was up 20.1% year over year and came above our expectation of 15% sales thanks to favorable utilization trends and healthy prescription demand. Growing consumer healthcare contributed nicely with the acquired nicotine replacement therapy now making up about 7% of total sales. The firm continues to invest in its biosimilars portfolio, which has seen some recent wins, including the FDA accepting partner Alvotech's denosumab (bone loss treatment) filing in March. We maintain our fair value estimate of $14 per share and see the stock trading in 3-star territory.