Dr Reddy's lab - US Drives Sales Growth, API saves margin.
Dr Reddy’s - US Drives Sales Growth, API Saves Margin
Dr Reddy’s Q2 FY12 result that was slightly higher than our sales estimate, but was in line with our earnings estimate. API performance accounts for the bulk of the outperformance along with US generics and Russia and CIS markets. Despite a slew of low competition launches and 600 bps improvements in API gross margin, the EBITDA margin for Q2 FY12 remained marginally lower Y-o-Y. This highlights our oft repeated stance that the low competition launches have many product specific challenges that reduces the lucrative ness of the portfolio. We do not change our FY12 estimates.
We reiterate our Market Perform rating with a target price of Rs.1615.
Dr Reddy’s Q2 FY12 result that was slightly higher than our sales estimate, but was in line with our earnings estimate. API performance accounts for the bulk of the outperformance along with US generics and Russia and CIS markets. Despite a slew of low competition launches and 600 bps improvements in API gross margin, the EBITDA margin for Q2 FY12 remained marginally lower Y-o-Y. This highlights our oft repeated stance that the low competition launches have many product specific challenges that reduces the lucrative ness of the portfolio. We do not change our FY12 estimates.
We reiterate our Market Perform rating with a target price of Rs.1615.
COMPANIES MENTIONED
Dr Reddy's lab
Dr Reddy's lab
