KRChoksey is bullish on Dr Reddys Labs and has recommended buy rating on the stock with a target of Rs 1787 in its September 26, 2011 research report.
“Dr Reddys and JB Chemicals terminated business deal related to pharmaceutical prescription portfolio in the Russia & other CIS regions. Also it ended a supply agreement, where JB Chemicals manufactures & supply of these products to DRL associated with the acquired brands.”
“Dr Reddy’s presence in Russia- Russian & CIS regions contributed around 15% (FY11- Rs 1086cr) to the total business (FY11 – Rs 7469cr) which grew at a CAGR of 25% over FYO8-FY11. The company has 4 major brands mainly Omez, Nise, Ketorol & Ciprolet which are at no. 1 position in their respective segments. Russia market- Valued at USD 18bn, growing at a GAGR rate of 15% over last four years. Retail forms a major part of the Russian market. The major thrust is on OTC market followed by Branded Formulations segment.”
“We don’t expect any major impact on DRL’s revenue front as these 20 brands contribute 1.3% to its total revenue. If the deal would have happened, it would have allowed DRL to scale up its Russian business which currently contributes 15% of the total revenue (Rs 7,500cr FY11). Also it would have opened up a great market opportunity coupled with limited competition with access to 20 brands including Key ones like Metrogyl; Unispaz & Jocet. Our recommendation on the stock is BUY with a target price of Rs 1787,” says KRChoksey research report.
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“Dr Reddys and JB Chemicals terminated business deal related to pharmaceutical prescription portfolio in the Russia & other CIS regions. Also it ended a supply agreement, where JB Chemicals manufactures & supply of these products to DRL associated with the acquired brands.”
“Dr Reddy’s presence in Russia- Russian & CIS regions contributed around 15% (FY11- Rs 1086cr) to the total business (FY11 – Rs 7469cr) which grew at a CAGR of 25% over FYO8-FY11. The company has 4 major brands mainly Omez, Nise, Ketorol & Ciprolet which are at no. 1 position in their respective segments. Russia market- Valued at USD 18bn, growing at a GAGR rate of 15% over last four years. Retail forms a major part of the Russian market. The major thrust is on OTC market followed by Branded Formulations segment.”
“We don’t expect any major impact on DRL’s revenue front as these 20 brands contribute 1.3% to its total revenue. If the deal would have happened, it would have allowed DRL to scale up its Russian business which currently contributes 15% of the total revenue (Rs 7,500cr FY11). Also it would have opened up a great market opportunity coupled with limited competition with access to 20 brands including Key ones like Metrogyl; Unispaz & Jocet. Our recommendation on the stock is BUY with a target price of Rs 1787,” says KRChoksey research report.
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