Dr. Reddy's Laboratories Limited (DRREDDY)
Large CapPharma stocks · Large cap · NSE
Dr. Reddy's Laboratories is an integrated pharmaceutical company. This call focuses on a temporary supply delay for its Semaglutide injection, a key metabolic therapy, due to an impurity issue identified during the scale-up of its synthetic API manufacturing process.
One read, four checks
75+ is strong, 60-74 is usable, 45-59 is mixed, and below 45 needs caution. These are research lenses, not buy/sell instructions.
Weak fundamentals, management trust is acceptable, price trend argues for patience, and recent execution is weak.
Fundamental lens: valuation, quality, growth, balance sheet, and cash flow.
low confidence · 0/0 claims checked
Timing lens: price trend and sector relative strength.
Rolling lens: recent quarterly delivery, not the latest single-result score.
Quarter ended 30 Jun 2026
Bad · 0/100Rev -6% YoY · PAT -69% YoY · margin compression · +7% QoQ
| Metric | This quarter | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹8,100 Cr | -5.5% | +7.3% |
| EBITDA | ₹860 Cr | -60.4% | +125.1% |
| Operating margin | 11.0% | -1400 bps | +600 bps |
| PAT | ₹436 Cr | -69.1% | +97.3% |
| PAT margin | 5.4% | -1107 bps | +245 bps |
NDF means not disclosed in the current structured filing feed. It is intentionally not treated as zero.
Business & thesis
Growth engines, tailwinds/headwinds, and risk radar from management commentary
Business & thesis
Growth engines, tailwinds/headwinds, and risk radar from management commentary
Where growth can come from, and what can break the case
Semaglutide Injection Supply Halted Due to API Scale-Up Impurity; Commercial Supplies Expected to Resume Late October/Early November.
A critical product's supply is temporarily halted, impacting near-term revenue expectations for Semaglutide injection. While management is confident in resolving the issue by September and resuming supply, the delay and potential inventory write-down introduce uncertainty. The long-term demand and regulatory filings remain unaffected.
Semaglutide Injection
To support the growing demand for Semaglutide injection globally, we scaled up the synthetic API manufacturing process.
Semaglutide Oral Tablets
There is no impact on the supply of Semaglutide oral tablets, which utilizes a different API source.
Synthetic API Manufacturing Scale-up
We scaled up the synthetic API manufacturing process at our API facility, with the intent of increasing the API output.
New Injectable Facility
We are building our facility, and we also use that for our product. It will be used for semaglutide as well as for other products.
Strong Demand for Semaglutide
Nothing has changed. Unfortunately, if we had 15 million, we could supply that also. So, there is no shortage of demand, and I don't see shortage of demand also going forward.
API Impurity Issue
One of the impurities were found to be out of specifications upon testing of the finished drug product. It means that it was degrading while we made the formulation.
Temporary Supply Halt
There will be a halt of supply between now and September. This will result in a temporary delay to commercial supplies.
Further Delay in Resolution
Is there a risk that we can fail again? Always. There is confidence, but naturally there is a risk of a further delay.
Inventory Write-down
We may need to write down the batches that were associated with that. Probably, yes. These details you'll see in two weeks-time.
Partner Relationships
Some of our partners have alternatives, some of them don't. If they will choose to do to a different partnership or to go elsewhere, we'll obviously respect it.
Management accountability
What management said, and what results must prove
Management accountability
What management said, and what results must prove
What management said, and what results must prove
Issuer guidance and extracted claims are tracked against later reported outcomes. Treat these as management statements, not IndiaPulse forecasts.
This call is not a financial results update but an operational update on a specific product. The impact is on sequential supply momentum for future quarters (Q3 and Q4 FY27), making QoQ the relevant comparison for tracking the resumption and ramp-up of commercial supplies.
USFDA Observations/Compliance
INTACTOur manufacturing facilities continue to operate in compliance with applicable cGMP and global regulatory requirements.
Regulatory Filings
INTACTThere is no impact on the product's existing global regulatory filings, whether approved or currently under review.
EBITDA Margin
UNDER_STRESSWe will miss to sell certain quantities in this period of time, so obviously this will be a downside of what we have discussed. All the stuff that we have discussed during our NDR, as well as with you guys remain the same.
Semaglutide Injection Supply Target (FY27)
UNDER_STRESSSubject to a successful validation, we will be on track to supply 6-7 million pens between Q3 and Q4 of FY27. This is a reduction from earlier annual targets due to the delay.
Commitment to Quality and Transparency
We believe we have taken the right course of action to ensure consistent product quality as we scale. It was important for us to communicate a development related to semaglutide, as early as possible.
Urgency in Resolution
We remain committed to resolving the issue with urgency and to supporting our partners and patients through a reliable long-term supply.
Long-term Partnership with OneSource
We plan to enter into a long-term relationship with OneSource on semaglutide injection. We are committed to be with OneSource actually for long term.
Numbers and claims to verify in the next filings
| Checkpoint | Current evidence | What to verify next |
|---|---|---|
| Resolution of API Impurity Issue | Investigation underway to determine root cause and implement process improvements. | Successful completion of validation of the revised manufacturing process, expected around September. |
| Resumption of Commercial Supply | Halted until validation is complete. | Commercial API scale to OneSource during October, actual supply to market resuming late October/early November. |
| Semaglutide Injection Supply (FY27) | 6-7 million pens targeted between Q3 and Q4 FY27. | Confirmation of supply volumes and any further revisions to the target. |
| Inventory Write-down Impact | Likely write-down of affected batches. | Specific financial details regarding the write-down in Q1FY27 results. |
Verification checkpoints are IndiaPulse research interpretation, not investment advice.
Trend score and candlestick chart
37Bearishfull bear SMA stack · MACD − · near 52W low · sector +2.2pp vs Nifty (3M)
Technical chart
DRREDDYdaily · 1Y · AUTO-12.4%Daily technical trend read
Bearish setupTrend is weak — long-term trend down. RSI 39.
- Price < SMA20 < SMA50 < SMA200 — full bearish stack.
- SMA20 roughly flat — short-term momentum stalled.
- RSI(14) at 39 — falling, no extreme reading.
- MACD below signal, histogram expanding negatively — bearish momentum building.
- Within 5% of 52-week low — testing support.
Mechanical read from the price + indicator series above. Not a recommendation — technical setups can reverse without warning, especially around earnings and macro events.
Relative Strength & Trend Stage
- Price is 8.6% below the 30-week proxy without full trend alignment.
- The 30-week proxy changed -0.3% over 20 sessions.
- The moving-average structure does not confirm Stage 2 or Stage 4.
Valuation & score drivers
U-Score 41 · WATCHLIST · pillar breakdown, sector model, fair-value anchor
Valuation & score drivers
U-Score 41 · WATCHLIST · pillar breakdown, sector model, fair-value anchor
Fundamental score breakdown
WATCHLISTWhy this score?
Top U-Score contributors and drags from the latest stored fundamentals.
Positive drivers
- Piotroski is strong at 8/9.
- Fair-value margin of safety is positive at 33.8%.
- Balance sheet contributes 8/15 to the score.
Main drags
- Quality is weaker at 0/20; verify the latest quarterly trend.
- Valuation is weaker at 11/30; verify the latest quarterly trend.
- Cash flow is weaker at 4/10; verify the latest quarterly trend.
Healthcare valuation: PE/EVEBITDA with regulatory and pipeline checks
Healthcare valuation needs both earnings quality and regulatory/pipeline context.
Stored run vs live recompute
This shows the stored score trend when snapshots exist, and also compares the latest stored nightly score with a live recompute from current fundamentals and price.
Score history
12 stored score snapshots. Latest stored move: +2 points.
Factor attribution
Modelled fair value
Trust score
Does management behaviour match later outcomes? Claim delivery, forensic breakdown, evidence depth
Trust score
Does management behaviour match later outcomes? Claim delivery, forensic breakdown, evidence depth
Trust asks: does management behaviour match later outcomes? Higher is better, but confidence and evidence depth matter as much as the number.
Mixed Trust: Claim history is still being built. It ranks around the 28th percentile of the scored universe and 19th percentile within Pharma. Main check: results consistency is weak at 17/100.
Healthy Trust Lite: Promoter pledge is zero. Key concern: 2 latest quarters had PAT decline worse than 25% YoY.
Usable, but needs evidence. Treat guidance with a margin of safety.
overall median 67 · Pharma: 19th pctile, median 70 · Large: 17th pctile, median 73
70 documents have extracted text, but claim history is not strong enough yet.
0 claims extracted · No contradicted claim yet
How to read this Trust Score
Mixed Trust · low confidenceRead Trust alongside U-Score, result consistency, and technical trend. A cheap stock with weak Trust needs a larger margin of safety; a high Trust score does not make an expensive stock attractive by itself.
Forensic breakdown
Read low sub-scores as due-diligence warnings, not automatic sell signals.
Trust positives
- ▸Promoter pledge is zero.
- ▸10 years of positive FCF.
Trust risks
- ▸2 latest quarters had PAT decline worse than 25% YoY.
- ▸ROCE trend is -8%.
- ▸Revenue CAGR is 11% but EPS CAGR is -4%.
- ▸0/4 latest quarters had positive YoY PAT growth.
Trust Lite uses financial behaviour only. Prefer claim-tested Trust when enough concall claims have later outcomes.
Financials
Full fundamentals table and 10-year revenue / profit / ROE history
Financials
Full fundamentals table and 10-year revenue / profit / ROE history
Fundamentals
Valuation
- P/E
- 29.80
- P/B
- 2.54
- EV/EBITDA
- 14.30
- Market Cap
- 96072.00Cr
Profitability
- ROE
- 11.20%
- ROCE
- 13.00%
- ROA
- 5.63%
- Dividend Y
- 0.70%
Growth (CAGR)
- Revenue 5Y
- 12.00%
- EPS 5Y
- 15.00%
- Revenue 3Y
- 11.00%
- EPS 3Y
- -4.00%
Balance Sheet
- Debt/Equity
- 0.20
- Interest Coverage
- 12.36×
- Altman Z
- 5.15
- Book Value
- 454.00
Cash Flow
- FCF Yield
- —
- FCF Positive Y
- 10/5
- OCF
- 5674.00 Cr
- EPS TTM
- 38.61
Shareholding
- Promoter Hold
- 26.63%
- Promoter Pledge
- 0.00%
- Momentum 52W
- 21%
Financial History
Updated 5/9/2026
Revenue
₹ CrNet Profit
₹ CrReturn on Equity
%Peers
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Peers
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Peers
Business-comparable peers in Pharma — ranked by industry, sub-sector, theme-tag overlap, market cap, and U-Score similarity. Green cells mark the best available peer metric in this table.