Dr. Reddy's Laboratories Ltd is an Indian multinational pharmaceutical company founded in 1984. It has grown through acquisitions like Benzex Laboratories in 1988 and Cheminor Drugs in 2000 to become one of the largest pharmaceutical companies in India. The company expects its US business to grow at a compound annual growth rate of 15.4% from 2016 to 2018 through new product launches and ramping up existing products. While challenges remain in markets like Russia and the rest of the world, India is showing promising growth following the acquisition of UCB's India business. Overall, the analysis found that Dr. Reddy's is a profitable firm able to pay its debts and provide returns to shareholders.

2. BY
TENNETI SHIVAJI
CHINTALA PRUTHIVIRAJ
SUNDARA RAGHAVENDRAN
KRUTARTH GOKANI
SIDDHARTH BORADE

3. Introduction to DRL
 Founded in 1984 by Anji Reddy, an entrepreneur
and scientist
 Acquisition of Benzex laboratories in 1988
 Dr Reddy’s research foundation (DRF) was
established in 1993
 Merger with Cheminor Drugs in 2000 was a big
leap, rose as the third largest pharmaceutical
company.
 GV Prasad was appointed the executive vice-
chairman and CEO while Satish Reddy became
COO.
 Acquisition of Betapharm in 2006 (US$ 570

4. Dr.Reddy's Laboratories Ltd
Parent Company Dr.Reddy's Laboratories Ltd
Category Pharmaceuticals
Sector Health care
Tagline/ Slogan Life. Research. Hope
USP
Strong vertically integrated portfolio of products,
businesses & geographies
STP
Product portfolio
Active Pharmaceutical Ingredients (APIs), Custom
Pharmaceutical Services (CPS), generics, biosimiler,
differentiated formulations and News Chemical
Entities (NCEs)
Target Group Healthcare professionals, retail outlets
Positioning
Committed to providing affordable and innovative
medicines for healthier lives

5. Industry Classification
Pharma
Bulk Drugs (API)
Contract
Research
Formulations
Patented Generics
Generic generics Branded generics

6. Report by

7. DR.REDDY’S STOCK DATA

8. Compounded annual growth
rate (CAGR)
US business expected to grow at CAGR
of 15.4% in FY16P-18E

9. We expect revenues to grow at a CAGR of 10.6% to | 18911.7 crore
in FY16P-18E, on the back of growth in the GG segment.
The GG is likely to grow at a CAGR of 12.4% to | 16184.9 crore during
the same period.
We expect US revenues to normalise from H2FY17 either by
successful resolution of warning letter or site transfers.

10. India is showing promising growth as well with a
recalibrated approach and the recent acquisition
(UCB’s India business) bodes well for the future.
Russia, RoW and the PSAI segments but continue to pose
challenges for being lumpy and volatile.

11. INDUSTRY PHARMA
CMP (as on 25 Oct 2016) Rs 3,201
Target Price Rs 3,150
Dr Reddy’s
NEUTRAL

12. US generics:
Revenues improved sequentially to ~US$ 241mn
(v/s US$ 232mn in 1Q).
 primarily driven by four new launches during the quarter. With
a few more scheduled drug launches, like gGleevec. and a ramp up in
existing products,
 2HFY17 is likely to be better than 1HFY17. The approval for
gCopaxone is also on track and DRRD is likely to re-file the DMF in
3QFY17.

13. Re-inspection likely in 2HFY17:
DRRD has already sent a request to US FDA for re-inspection of
the three facilities under warning letters.
Earlier clearance could substantially improve our estimates for
FY18/FY19E.
 Slight recovery in margins:
Absence of remediation costs in 2Q has led to a slight
recovery in EBITDA margins at 16.6% versus in 11.7% in 1QFY17.
 Adjusted for NPPA provision of Rs 344mn in 2Q, margins were
at 17.8%. We expect margins to revert to 20% levels in
2HFY17.

14. 14
(Owners point of view)
Particulars Mar '16 Mar '15
Return on Equity Ratio 0.37 0.38
Earnings Per Share 79.39 78.57
Dividend Per Share 20 20
Dividend Payout Ratio Net Profit 25.13 20.29
Dividend Payout Ratio Cash Profit 16.99 15.7
Return on Equity Ratio=Net Profit after Tax / Net Worth
Earning per Share = Net Profits available to Equity Shareholders/
Number of Equity Shares
Dividend Per Equity Share = Total Profits distributed to Equity
Shareholders/
Number of Equity Shares
Dividend Pay-Out Ratio = Dividend Per Equity Share / Earning Per Share

15. (Based on investments)
Particulars Mar '16 Mar '15
Return On Capital Employed(%) 13.61 15.43
Return on Assets Excluding
Revaluations 680.24 624.13
Return on Assets Including
Revaluations 680.24 624.13
Return on Capital Employed= Net Profits after Tax /
Capital Employed *100
Return on Assets= Net Profits after Tax / Average
Assets *100

16. (Based on Sales)
Particulars Mar '16 Mar '15
Gross Profit Margin(%) 17.19 18.98
Net Profit Margin(%) 13.26 16.77
Operating Profit Margin(%) 23.55 23.88
Gross Profits Ratio = Gross Profits / Sales *100
Operating Profits Ratio = Operating Profits /
Sales *100
Net Profits Ratio = Net Profits / Sales *100

17. 17
 (Based on share price)
Particulars Mar '16 Mar '15
Price Earning Ratio 43.75 31.75
Yield Per share 0.13 0.11
Book Value 680.24 624.13
Price Earning Ratio = Market Price per
Share * / EPS
Yield Per Share = Dividend Per Share /
Market Price Per Share*
Book Value Per Share= Equity Share
holders’ Funds/ Number of Shares

18. Particulars Mar '16 Mar '15
Debt ratio 9.15 9.87
Equity Ratio 92.1 91.88
Debt Equity Ratio 0.27 0.29
EQUITY RATIO
Formula = Shareholders Equity /Total Capital Employed
DEBT RATIO
Formula = Total Debt/ Total Capital Employed
DEBT TO EQUITY RATIO
Formula = Total Debt/ Shareholders’ Equity

19. Conclusion:
 After observing all the reports we got an idea that
the Dr.Reddys Labs Ltd., is a profitable firm.
Because through out the analysis of years, we
found that the company is getting profitable
return on short term and long term investment,
The Company share price is Rs.3046.90/- and their
profit margin has been increased as well and they
are in the position to pay their debts with in their
resources.

20.  THANK YOU