One-glance verdict
Overvalued
$7.82 our estimate vs market $15.05
Wall Street consensus: $14.46 (85.0% higher than our fair-value estimate)
92% above our estimate, beyond the bull case
Fundamentals snapshot
Dr. Reddy's Laboratories Limited
RDY · NYQ · Healthcare · Drug Manufacturers - Specialty & Generic
Current price
$15.05
52-week range
$11.36 - $15.67
Market cap
$12.55B
Balance sheet
Healthy
13.41x Strong cushion
Net cash $42.11M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 3.2% last year.
- Reward Returns 7.3% on equity, ahead of 33% of its peers.
- Risk Stock trades 18610.1% above its 5-year average P/E.
- Risk Operating margin compressed from 24.0% to 14.7% over 3 years.
What this company does
Dr. Reddy's Laboratories Limited
Dr. Reddy's Laboratories Limited is a pharmaceutical company that makes and sells medicines, including generic drugs that work just like their branded versions, and also sells the key ingredients that go into making those medicines. The money they make primarily comes from selling these finished medicines and the ingredients globally, which is important because it shows their reach and the diverse ways they generate income. They operate in many countries, making and selling products for a wide range of health conditions like heart disease and cancer.
How the company got here
Dr. Reddy's Laboratories Limited was founded in 1984 in Hyderabad, India, with a vision to make high-quality medicines accessible and affordable. It started by manufacturing active pharmaceutical ingredients (APIs), which are the core components of drugs, and gradually expanded into finished pharmaceutical products. A key turning point was its strategic move into international markets, particularly in North America and Europe, which helped diversify its revenue streams and establish a global presence. Over the years, the company has grown through a combination of organic expansion and strategic acquisitions, building a robust portfolio across various therapeutic areas.
What it actually does
Dr. Reddy's Laboratories is a pharmaceutical company that develops, manufactures, and sells a wide range of medicines. Think of them as a company that makes both the key ingredients that go into pills and the final pills themselves. They offer both branded and generic versions of medications, meaning they sell both their own unique formulations and versions of drugs whose patents have expired and can be made by anyone. Their products cover many different health conditions, from stomach issues and heart problems to diabetes and skin conditions, aiming to provide treatments for everyday ailments and more serious diseases.
Global Generics
This is the largest part of Dr. Reddy's business, making up a significant portion of its overall sales. In this segment, the company produces and sells both prescription and over-the-counter (OTC) medicines. These include generic drugs, which are essentially copies of brand-name drugs that have become more affordable after their original patents expire, and also branded generics. They also have a presence in the biologics business, which involves complex medicines derived from living organisms. This segment serves patients by providing a wide array of affordable and effective treatment options across many different health categories.
Pharmaceutical Services and Active Ingredients (PSAI)
The PSAI segment is where Dr. Reddy's manufactures and sells the fundamental building blocks of medicines, known as active pharmaceutical ingredients (APIs), and the intermediate chemicals used to make them. Essentially, they supply the raw materials that other pharmaceutical companies, and even their own Global Generics business, need to create finished drugs. This segment also offers contract research services, meaning they help other companies with the scientific research and development needed to create new medicines. It's a crucial part of the pharmaceutical supply chain, ensuring the availability of essential drug components.
Others
This segment represents Dr. Reddy's efforts in developing more specialized and innovative treatments. It focuses on creating therapies for challenging areas like oncology (cancer treatment) and inflammation. The 'Others' segment is also involved in the research, development, and commercialization of 'differentiated formulations,' which are advanced versions of existing drugs designed to offer improved effectiveness, convenience, or patient experience. While smaller than the generics business, this segment is focused on future growth and addressing unmet medical needs with cutting-edge pharmaceutical solutions.
What management is betting on now
Dr. Reddy's management is focused on strengthening its position in key markets like North America and Europe while also expanding its presence in emerging economies. A major strategic priority is to grow its proprietary products and differentiated formulations businesses, which offer higher profit potential than standard generics. The company is also investing in research and development to build a pipeline of new drugs and therapies, particularly in areas like oncology and immunology. Furthermore, they are committed to operational efficiency and digital transformation to streamline processes and improve overall performance.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $7.82 vs current price $15.05
Wall Street consensus is the average analyst price target: $14.46 (85.0% higher than our fair-value estimate).
Our most-likely fair value is $7.82 a share — about 48.0% below today's price of $15.05, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $42.1M - more cash than debt. Interest coverage 13.4x.
Net debt
$-42.11M
Interest coverage
13.41x
Dr. Reddy's Laboratories Limited's profit covers its interest bill about 13.4 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
RDY
BASELINE
Dr. Reddy's Laboratories Limited
Total debt $769.68M Interest coverage 13.41x This is the baseline the peer rows are being compared against.
Total debt $17.00B Interest coverage 4.31x -68% vs RDY Carries about 3.1x less debt cushion than RDY.
Total debt $13.58B Interest coverage 0.54x -96% vs RDY Carries about 24.9x less debt cushion than RDY.
Total debt $3.28B Interest coverage 1.65x -88% vs RDY Carries about 8.1x less debt cushion than RDY.
Total debt $691.69M Interest coverage 5.51x -59% vs RDY Carries about 2.4x less debt cushion than RDY.
Total debt $617.36M Interest coverage 4.05x -70% vs RDY Carries about 3.3x less debt cushion than RDY.
What you should know
The case for and against RDY
3 Rewards
3 Risks
Rewards
-
Revenue grew 3.2% last year.
-
Returns 7.3% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Stock trades 18610.1% above its 5-year average P/E.
-
Operating margin compressed from 24.0% to 14.7% over 3 years.
-
Insider ownership is only 0.0% (peer median: 5.4%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
41.81x
Forward P/E
22.71x
P/B
18.34x
P/S
0.04x
EV/EBITDA
1.49x
PEG ratio
2.05x
Profitability
How much profit each dollar creates
Gross margin
49.5%
Operating margin
14.7%
Net margin
8.5%
ROE
7.3%
ROA
3.4%
Health
Liquidity and balance-sheet strength
Debt / equity
0.19x
Current ratio
1.93x
Quick ratio
1.15x
Total debt
$769.68M
Total cash
$811.79M
Growth
How the business has been compounding
Revenue TTM
$3.51B
Revenue 5Y CAGR
11.0%
EPS TTM
0.36
EPS 5Y CAGR
-1.7%
Cash flow
How much cash the business throws off
Operating CF TTM
$604.30M
Free CF TTM
$195.17M
FCF margin
5.6%
Dividend
Shareholder payout
Yield
0.5%
Payout ratio
22.7%
Last ex-div date
2026-07-09