Dr Reddys Laboratories Analysis

dividend

Pros

• Dividends per share have increased over the past 10 years.
• Dividends paid are well covered by earnings (4.7x coverage).
• Dividends after 3 years are expected to be thoroughly covered by earnings (7.2x coverage).
• Dividends per share have been stable in the past 10 years.

Cons

• Dr. Reddy's Laboratories's pays a lower dividend yield than the bottom 25% of dividend payers in India (0.76%).
• Dr. Reddy's Laboratories's dividend is below the markets top 25% of dividend payers in India (3.08%).

future

Pros

• Dr. Reddy's Laboratories's earnings growth is expected to exceed the low risk savings rate of 7.2%.
• Dr. Reddy's Laboratories's earnings are expected to exceed the low risk growth rate next year.
• Dr. Reddy's Laboratories's earnings are expected to increase by more than the low risk growth rate in 3 years time.
• Dr. Reddy's Laboratories's net income is expected to increase by more than 50% in 2 years time.
• Performance (ROE) is expected to be above the current IN Pharmaceuticals industry average.
• An improvement in Dr. Reddy's Laboratories's performance (ROE) is expected over the next 3 years.
• Dr. Reddy's Laboratories's revenue growth is expected to exceed the India market average.

Cons

• Cash flow for Dr. Reddy's Laboratories is expected to increase but not above the 50% threshold in 2 years time.
• Dr. Reddy's Laboratories's earnings are expected to grow by 18.3% yearly, however this is not considered high growth (20% yearly).
• Dr. Reddy's Laboratories's earnings growth is positive but not above the India market average.
• Dr. Reddy's Laboratories is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
• Dr. Reddy's Laboratories's revenue is expected to increase but not above the 50% threshold in 2 years time.
• Dr. Reddy's Laboratories's revenue is expected to grow by 8.6% yearly, however this is not considered high growth (20% yearly).

health

Pros

• Dr. Reddy's Laboratories is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
• Dr. Reddy's Laboratories is profitable, therefore cash runway is not a concern.
• Dr. Reddy's Laboratories is profitable, therefore cash runway is not a concern.
• Debt is well covered by operating cash flow (147.4%, greater than 20% of total debt).
• Debt is covered by short term assets, assets are 6.4x debt.
• Dr. Reddy's Laboratories's cash and other short term assets cover its long term commitments.
• The level of debt compared to net worth has been reduced over the past 5 years (37.8% vs 13.1% today).
• Dr. Reddy's Laboratories earns more interest than it pays, coverage of interest payments is not a concern.
• Dr. Reddy's Laboratories's level of debt (13.1%) compared to net worth is satisfactory (less than 40%).

Cons

• High level of physical assets or inventory.

management

Pros

• The tenure for the Dr. Reddy's Laboratories board of directors is about average.
• The tenure for the Dr. Reddy's Laboratories management team is about average.

Cons

• Erez's remuneration is higher than average for companies of similar size in India.
• Dr. Reddy's Laboratories individual insiders have sold more shares than they have bought in the past 3 months.

misc

Pros

Cons

• Dr. Reddy's Laboratories has significant price volatility in the past 3 months.

past

Pros

• Dr. Reddy's Laboratories's 1-year earnings growth exceeds its 5-year average (3.6% vs -1.9%)
• Dr. Reddy's Laboratories has significantly improved its use of capital last year versus 3 years ago (Return on Capital Employed).

Cons

• Dr. Reddy's Laboratories's year on year earnings growth rate was negative over the past 5 years, however the most recent earnings are above average.
• Dr. Reddy's Laboratories used its assets less efficiently than the IN Pharmaceuticals industry average last year based on Return on Assets.
• Dr. Reddy's Laboratories has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
• Dr. Reddy's Laboratories's earnings growth has not exceeded the IN Pharmaceuticals industry average in the past year (3.6% vs 22.7%).

value

Pros

• DRREDDY outperformed the Pharmaceuticals industry which returned 26.7% over the past year.
• DRREDDY outperformed the Market in India which returned -14.5% over the past year.
• NSEI:DRREDDY is up 7.2% along with the Pharmaceuticals industry (6.8%) over the past month.
• NSEI:DRREDDY is up 7.2% along with the India market (8%) over the past month.

Cons

• Dr. Reddy's Laboratories's share price is above the future cash flow value, it's not available at a moderate discount (< 20%).
• Dr. Reddy's Laboratories's share price is above the future cash flow value, it's not available at a substantial discount (< 40%).
• Dr. Reddy's Laboratories is overvalued based on assets compared to the IN Pharmaceuticals industry average.
• Dr. Reddy's Laboratories is poor value based on expected growth next year.
• Dr. Reddy's Laboratories is overvalued based on earnings compared to the IN Pharmaceuticals industry average.
• Dr. Reddy's Laboratories is overvalued based on earnings compared to the India market.