Nomura has maintained its 'Buy' rating and target price of Rs 1,740 on Dr Reddy's Laboratories ahead of its September-quarter results on October 23, expecting a sequential improvement in revenue and profitability, while EBITDA margin remains below 20%.
In its October 21 research note, titled "Q2FY27F Poised for QoQ Operational Gains", the brokerage forecasts an EBITDA margin of 18.1%, compared with 14.3% in the first quarter of FY27 on an adjusted basis. Its sales, EBITDA and profit-after-tax estimates are 1.4%, 23.1% and 20.7% above consensus, respectively.
Nomura expects the quarter to be the third without a material contribution from gRevlimid. It expects North America generics (NAG) sales to improve sequentially on a relatively low base, supported by launches of generic Bosulif and Sugammadex. Dr Reddy's has gained 71% market share in the 400mg generic Bosulif segment as of August 2026, according to IQVIA, while its market share in generic Sugammadex stood at 16%.
The brokerage expects the company to sustain mid-teen growth in India after recording 13.7% year-on-year growth in the Indian Pharma Market for the quarter ended September 2026, according to Pharmarack. Growth in Russia is likely to remain strong, supported by favourable currency movements, while constant-currency growth is expected to remain in the mid-single digits.
Nomura said management's commentary on resumption of commercial supplies of semaglutide will be closely monitored. The company has indicated that the project to address the impurity in the scale-up batch is on track and that commercial supplies are expected to commence in November 2026. Management has guided for sales of 6-7 million pens in the second half of FY27, which Nomura expects to generate more than $100 million in revenue.