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Dr Reddy's Laboratories Ltd ADR RDY

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Morningstar’s Analysis

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Dr. Reddy Reports a Strong Third Quarter, Yet Short of Unreasonable Consensus Expectations

Soo Romanoff Equity Analyst

Analyst Note

| Soo Romanoff |

No-moat Dr. Reddy reported third-quarter results that were short of consensus expectations as tracked by FactSet. Market expectations continue to anticipate the international generic with limited capabilities to significantly outperform the overall generic market. Although management is a strong generic operator with above average gross margins, the company does not have the wherewithal to compete in a fierce market. The company is also playing catch-up through its recent acquisitions, but the market continues to evolve, and the increasing stakes require differentiation. We anticipate the company will continue to compete in the low-rung niche of the generic market. Based on the strong quarter, we have increased our fair value estimate to $35 per share from $30.

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Company Profile

Business Description

With headquarters in India, Dr. Reddy's Laboratories develops and manufactures generic pharmaceuticals. The firm operates in three divisions: global generics, pharmaceutical services and active ingredients, and proprietary products and other, which make up most of the company's revenue. Most of the company’s sales are based in the United States.

8-2-337, Road No. 3, Banjara Hills
Hyderabad, 500 034, India
T +91 4049002900
Sector Healthcare
Industry Drug Manufacturers - Specialty & Generic
Most Recent Earnings Dec 31, 2020
Fiscal Year End Mar 31, 2021
Stock Type
Employees 21,650