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Dr Reddy's Laboratories Ltd ADR RDY

Morningstar Rating
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Stock XNYS Rating as of
$76.12 +0.71 (0.94%)
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As of Delayed Price Closed
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Company Report

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Haleon: Exits Smoking Cessation Business Outside US to Focus on Power Brands

Keonhee Kim

Wide-moat Haleon announced on June 26 that it entered into an agreement to divest its smoking cessation business outside the US to no-moat Dr. Reddy’s for GBP 500 million (GBP 458 million upfront plus performance-based payments of up to GBP 42 million). The portfolio includes brands like Nicotinell, Nicabate, and Habitrol. The deal is expected to close during the last quarter of 2024 at the earliest. We do not expect material changes to our model from this deal and maintain our fair value estimate of $8.80, or GBX 352, per share for Haleon and $60 per share for Dr. Reddy’s.

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Price vs Fair Value

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RDY is trading at a 469% premium.
Price
$75.41
Fair Value
$69.00
Uncertainty
High
1-Star Price
$99.00
5-Star Price
$85.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Generic versions of sizable drugs like Revlimid and Vascepa will help fuel Reddy’s top line.

Bears

Continued efforts from the Indian government to educate the public and roll out more non-branded generic drugs could act as a headwind for Dr. Reddy’s.

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News

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Trading Information

Previous Close Price
$75.41
Day Range
$75.09–76.27
52-Week Range
$61.60–77.72
Bid/Ask
$28.89 / $76.12
Market Cap
$12.68 Bil
Volume/Avg
212,587 / 247,361

Key Statistics

Price/Earnings (Normalized)
20.11
Price/Sales
3.76
Dividend Yield (Trailing)
0.64%
Dividend Yield (Forward)
0.63%
Total Yield
0.64%

Company Profile

Dr. Reddy’s is one of the largest generic drug manufacturers in the world. It has a significant presence in North America, a region that makes up roughly half of its generics sales, and it services India (22% of its generics sales), Russia (12%), and certain European and Latin American countries. Beyond simple generics, Dr. Reddy’s also has a solid portfolio of injectables which make up 25% of its North America sales. In branded generic markets like India, Dr. Reddy’s has established a compelling presence with its strong brand name and earned a top five spot in key therapeutic areas including oncology and gastroenterology. Dr. Reddy’s also has an active pharmaceutical ingredient business that manufactures over 150 APIs and sells in over 75 countries.
Sector
Healthcare
Industry
Drug Manufacturers - Specialty & Generic
Stock Style Box
Large Core
Total Number of Employees
27,048
Website
https://www.drreddys.com

Competitors

Valuation

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Metric
RDY
TEVA
VTRS
Price/Earnings (Normalized)
 20.116.273.69
Price/Book Value
 3.792.580.62
Price/Sales
 3.761.160.82
Price/Cash Flow
 16.5811.643.81
Price/Earnings
RDY
TEVA
VTRS

Financial Strength

Metric
RDY
TEVA
VTRS
Quick Ratio
 1.840.470.66
Current Ratio
 2.580.891.67
Interest Coverage
 41.670.181.15
Quick Ratio
RDY
TEVA
VTRS

Profitability

Metric
RDY
TEVA
VTRS
Return on Assets (Normalized)
 15.32%6.03%7.07%
Return on Equity (Normalized)
 21.28%35.36%16.57%
Return on Invested Capital (Normalized)
 19.75%12.54%9.85%
Return on Assets
RDY
TEVA
VTRS
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