Aniket Kangane BSE: 500124 | NSE: DRREDDY

FINANCIAL
MODELING
REPORT
(A Comprehensive DCF and Comparable Comps Valuation)
DR REDDY'S LABORATORIES LTD - One Page Profile

Founded in 1984 by Dr. K. Anji Reddy, Dr. Reddy's Laboratories is a global pharmaceutical company
headquartered in India. It develops, manufactures, and markets a wide range of pharmaceuticals in India and
internationally. With a strong focus on research and development, Dr. Reddy's Laboratories produces a diverse
portfolio of generic drugs, active pharmaceutical ingredients (APIs), and proprietary products.

INR (Crores)
Key Financial Metrics Mar-20 Mar-21 Mar-22 Mar-23 Share Price - 5Y
Total Sales 18,187 19,383 22,100 25,641 7000
Sales Growth (y-o-y) 14.89% 6.57% 14.02% 16.02% 6500
Gross Profit 7,481 7,770 8,767 11,109 6000
GP Margins (%) 41.14% 40.09% 39.67% 43.33% 5500
EBITDA Margin (%) 17.30% 21.72% 19.56% 29.02% 5000
EBIT Margin (%) 11.33% 15.65% 14.65% 25.10% 4500
Net Profit Margins(%) 11.14% 10.07% 9.88% 17.58% 4000
Earnings Per Share (In Rs.) 121.90 117.35 131.16 270.71 3500
EPS Growth (y-o-y) 3.83% -3.73% 11.76% 106.40% 3000
2020 2021 2022 2023

Key Financial Ratios Mar-20 Mar-21 Mar-22 Mar-23 Volume - 5Y

Price to Earnings 25.60x 38.48x 32.75x 17.08x 250
EV/EBITDA 17.12x 18.07x 16.76x 10.29x 200
EV/Sales 3.08x 3.99x 3.36x 3.10x 150
Price to Book value 3.33x 4.26x 3.72x 3.31x 100
Return on Equity (%) 12.99% 11.06% 11.36% 19.36% 50
Return on Capital Employed (%) 11.14% 14.42% 13.97% 25.13% 0
2020 2021 2022 2023
(In Millions)
Top 10 Shareholders Shares Holding (%) Market value Shareholding Pattern
Aps Trust 34.35 20.6 2,06,396
J P Morgan Chase Bank Na 25.61 15.4 1,53,890 Public 25.90%
Life Insurance Corporation Of India P & Gs Fund 8.42 5.1 50,606
Kallam Satish Reddy Huf 5.52 3.3 33,194 DIIs 18.31%
First Sentier Investors Icvc 3.87 2.3 23,251
Nps Trust-A/C Sbi Pension Fund Scheme Tax Saver 3.84 2.3 23,068
FIIs 29.13%
Hdfc Trustee Company Ltd. A/C Hdfc Nifty 50 Etf 2.71 1.6 16,257
Gunupati Venkateswara Prasad Huf 2.54 1.5 15,285
Promoters 26.65%
Sbi-Etf Nifty 50 2.37 1.4 14,238
Government Of Singapore 1.71 1.0 10,269
0% 10% 20% 30% 40%

Managerial Remuneration Designation % Change X of Median Salary Capital Structure

Mr. K Satish Reddy Chairman 12 202: 1 Share Price 6009.45
Mr. G V Prasad MD 19 329: 1 Number Of Shares O/s 16.65
Mr. Erez Israeli CEO -4 - Market Capitalization 100057.3
Mr. Parag Agarwal CFO 28 - Less: Cash 1730.2
Includes salary, commission and perquisites. They do not receive any amount as remuneration from any subsidiary company The Add: Debt 1347.2
median remuneration of employees increased by 8.5% in FY2023. Add: Minority Interest -
The number of permanent employees on the rolls of the Company as on March 31, 2023, is 20,599 Enterprise Value 99674.34

Future Vision
• Dr. Reddy's aims to reach many more people with their medications, aiming to serve over 1.5 billion patients by 2030.
• They are committed to keeping medications affordable to make sure everyone can access the treatment they need.
• Innovation is a priority, with the company developing new drugs to target diseases like cancer and address unmet medical needs.
• Dr. Reddy's is looking to the future by investing in new areas like digital therapeutics and cell and gene therapies.
• Sustainability is a focus, with goals to use renewable energy and reduce their environmental impact.
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

HISTORICAL FINANCIAL STATEMENT

Income Statement
Years Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Sales ₹ 15,283.0 ₹ 15,863.3 ₹ 14,367.6 ₹ 14,436.2 ₹ 15,829.5 ₹ 18,187.0 ₹ 19,382.7 ₹ 22,099.9 ₹ 25,641.1
Sales Growth - 3.80% -9.43% 0.48% 9.65% 14.89% 6.57% 14.02% 16.02%

COGS ₹ 8,116.7 ₹ 8,226.6 ₹ 7,992.9 ₹ 9,336.3 ₹ 9,622.9 ₹ 10,705.6 ₹ 11,612.8 ₹ 13,332.8 ₹ 14,531.7
COGS % Sales 53.11% 51.86% 55.63% 64.67% 60.79% 58.86% 59.91% 60.33% 56.67%

Gross Profit ₹ 7,166.3 ₹ 7,636.7 ₹ 6,374.7 ₹ 5,099.9 ₹ 6,206.6 ₹ 7,481.4 ₹ 7,769.9 ₹ 8,767.1 ₹ 11,109.4
Gross Profit % Sales 46.89% 48.14% 44.37% 35.33% 39.21% 41.14% 40.09% 39.67% 43.33%

Selling & General Expenses 3,398.6 3,756.4 3,731.0 2,593.5 2,647.1 4,334.3 3,560.6 4,444.7 3,667.9
S&G Exp % Sales 22.24% 23.68% 25.97% 17.97% 16.72% 23.83% 18.37% 20.11% 14.30%

EBITDA ₹ 3,767.7 ₹ 3,880.3 ₹ 2,643.7 ₹ 2,506.4 ₹ 3,559.5 ₹ 3,147.1 ₹ 4,209.3 ₹ 4,322.4 ₹ 7,441.5
EBITDA Margins 24.65% 24.46% 18.40% 17.36% 22.49% 17.30% 21.72% 19.56% 29.02%

Interest ₹ 108.2 82.6 63.4 78.8 88.9 ₹ 98.3 ₹ 97.0 ₹ 95.8 ₹ 142.8
Interest % Sales 0.71% 0.52% 0.44% 0.55% 0.56% 0.54% 0.50% 0.43% 0.56%

Depreciation ₹ 759.9 ₹ 938.9 ₹ 1,026.6 ₹ 1,077.2 ₹ 1,134.8 ₹ 1,163.1 ₹ 1,228.8 ₹ 1,165.2 ₹ 1,250.2
Depreciation % Sales 4.97% 5.92% 7.15% 7.46% 7.17% 6.40% 6.34% 5.27% 4.88%

EBT ₹ 2,899.6 ₹ 2,858.8 ₹ 1,553.7 ₹ 1,350.4 ₹ 2,335.8 ₹ 1,885.7 ₹ 2,883.5 ₹ 3,061.4 ₹ 6,048.5
EBT % Sales 18.97% 18.02% 10.81% 9.35% 14.76% 10.37% 14.88% 13.85% 23.59%

Tax ₹ 563.2 ₹ 751.1 ₹ 296.5 ₹ 438.0 ₹ 385.8 (₹ 140.3) ₹ 931.9 ₹ 878.9 ₹ 1,541.2
Effective Tax Rate 19.42% 26.27% 19.08% 32.43% 16.52% -7.44% 32.32% 28.71% 25.48%

Net Profit ₹ 2,336.4 ₹ 2,107.7 ₹ 1,257.2 ₹ 912.4 ₹ 1,950.0 ₹ 2,026.0 ₹ 1,951.6 ₹ 2,182.5 ₹ 4,507.3
Net Profit Margins 15.29% 13.29% 8.75% 6.32% 12.32% 11.14% 10.07% 9.88% 17.58%

No. Of Equity Shares ₹ 17.0 ₹ 17.1 ₹ 16.6 ₹ 16.6 ₹ 16.6 ₹ 16.6 ₹ 16.6 ₹ 16.6 ₹ 16.7

Earnings Per Share ₹ 137.1 ₹ 123.5 ₹ 75.9 ₹ 55.0 ₹ 117.4 ₹ 121.9 ₹ 117.4 ₹ 131.2 ₹ 270.7
EPS Growth % -9.89% -38.59% -27.51% 113.46% 3.83% -3.73% 11.76% 106.40%

Dividend Per Share ₹ 20.0 ₹ 20.0 ₹ 20.0 ₹ 20.0 ₹ 20.0 ₹ 25.0 ₹ 25.0 ₹ 30.0 ₹ 40.0
Dividend Payout Ratio 14.59% 16.19% 26.38% 36.39% 17.03% 20.51% 21.32% 22.87% 14.78%

Retained Earning 85.41% 83.81% 73.62% 63.61% 82.97% 79.49% 78.68% 77.13% 85.22%

Balance Sheet
Years Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Equity Share ₹ 85.2 ₹ 85.3 ₹ 82.9 ₹ 83.0 ₹ 83.0 ₹ 83.1 ₹ 83.2 ₹ 83.2 ₹ 83.3
Reserves ₹ 9,767.9 ₹ 12,484.5 ₹ 12,179.2 ₹ 12,488.6 ₹ 13,940.6 ₹ 15,515.7 ₹ 17,558.5 ₹ 19,129.2 ₹ 23,202.8
Borrowings ₹ 4,314.1 ₹ 3,352.1 ₹ 4,918.5 ₹ 5,071.4 ₹ 3,838.1 ₹ 2,210.2 ₹ 3,030.8 ₹ 3,384.5 ₹ 1,347.2
Other Liabilities ₹ 4,289.9 ₹ 4,408.5 ₹ 4,473.9 ₹ 4,706.3 ₹ 4,556.6 ₹ 5,414.3 ₹ 5,915.4 ₹ 7,148.6 ₹ 7,575.8
Total Liabilities ₹ 18,457.1 ₹ 20,330.4 ₹ 21,654.5 ₹ 22,349.3 ₹ 22,418.3 ₹ 23,223.3 ₹ 26,587.9 ₹ 29,745.5 ₹ 32,209.1

Fixed Asset Net Block ₹ 5,377.0 ₹ 6,563.0 ₹ 6,930.7 ₹ 6,968.0 ₹ 7,191.0 ₹ 6,850.3 ₹ 8,205.7 ₹ 8,121.5 ₹ 9,219.1
Capital Work in Progress ₹ 529.0 ₹ 772.2 ₹ 3,324.5 ₹ 3,470.5 ₹ 2,933.5 ₹ 1,535.1 ₹ 1,565.1 ₹ 1,293.4 ₹ 1,030.1
Investments ₹ 2,247.8 ₹ 3,833.1 ₹ 2,109.7 ₹ 2,298.3 ₹ 2,587.1 ₹ 2,677.8 ₹ 2,211.8 ₹ 2,615.9 ₹ 4,985.8
Other Assets ₹ 1,759.8 ₹ 1,987.1 ₹ 2,251.7 ₹ 2,387.1 ₹ 2,139.1 ₹ 3,420.3 ₹ 3,021.2 ₹ 3,530.7 ₹ 3,128.4
Total Non Current ₹ 9,913.6 ₹ 13,155.4 ₹ 14,616.6 ₹ 15,123.9 ₹ 14,850.7 ₹ 14,483.5 ₹ 15,003.8 ₹ 15,561.5 ₹ 18,363.4

Inventory 2569.9 2557.9 2852.8 2908.9 3357.9 3506.7 4541.2 5088.4 4867
Receivables ₹ 4,101.2 ₹ 4,125.0 ₹ 3,798.6 ₹ 4,052.7 ₹ 3,986.9 ₹ 5,027.8 ₹ 4,964.1 ₹ 6,676.4 ₹ 7,248.5
Cash & Bank ₹ 1,872.4 ₹ 492.1 ₹ 386.5 ₹ 263.8 ₹ 222.8 ₹ 205.3 ₹ 2,078.8 ₹ 2,419.2 ₹ 1,730.2
Total Current Asset ₹ 8,543.5 ₹ 7,175.0 ₹ 7,037.9 ₹ 7,225.4 ₹ 7,567.6 ₹ 8,739.8 ₹ 11,584.1 ₹ 14,184.0 ₹ 13,845.7

Total Assets ₹ 18,457.1 ₹ 20,330.4 ₹ 21,654.5 ₹ 22,349.3 ₹ 22,418.3 ₹ 23,223.3 ₹ 26,587.9 ₹ 29,745.5 ₹ 32,209.1

Check TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE TRUE
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

Cash Flow Statement

Years Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Profit from operations ₹ 4,554.0 ₹ 3,966.0 ₹ 3,241.0 ₹ 2,976.0 ₹ 3,171.0 ₹ 4,448.0 ₹ 4,971.0 ₹ 5,395.0 ₹ 7,744.0
Receivables (₹ 1,094.0) ₹ 83.0 ₹ 304.0 (₹ 210.0) ₹ 539.0 (₹ 1,245.0) ₹ 208.0 (₹ 1,701.0) (₹ 575.0)
Inventory (₹ 541.0) (₹ 252.0) (₹ 632.0) (₹ 323.0) (₹ 448.0) (₹ 149.0) (₹ 988.0) (₹ 991.0) (₹ 265.0)
Payables (₹ 4.0) ₹ 78.0 ₹ 180.0 ₹ 255.0 ₹ 40.0 ₹ 158.0 ₹ 286.0 ₹ 441.0 ₹ 2.0
Other WC items ₹ 156.0 ₹ 88.0 (₹ 371.0) (₹ 619.0) ₹ 53.0 ₹ 482.0 (₹ 335.0) ₹ 410.0 ₹ 53.0
Working capital changes (₹ 1,484.0) (₹ 2.0) (₹ 520.0) (₹ 897.0) ₹ 184.0 (₹ 754.0) (₹ 829.0) (₹ 1,841.0) (₹ 786.0)
Direct taxes (₹ 546.0) (₹ 701.0) (₹ 577.0) (₹ 276.0) (₹ 484.0) (₹ 710.0) (₹ 572.0) (₹ 744.0) (₹ 1,071.0)
Cash from Operating Activity ₹ 2,525.0 ₹ 3,262.0 ₹ 2,145.0 ₹ 1,803.0 ₹ 2,871.0 ₹ 2,984.0 ₹ 3,570.0 ₹ 2,810.0 ₹ 5,888.0
Fixed assets purchased (₹ 1,532.0) (₹ 1,206.0) (₹ 1,222.0) (₹ 1,104.0) (₹ 838.0) (₹ 612.0) (₹ 1,256.0) (₹ 1,905.0) (₹ 1,887.0)
Fixed assets sold ₹ 17.0 ₹ 8.0 ₹ 4.0 ₹ 14.0 ₹ 215.0 ₹ 39.0 ₹ 8.0 ₹ 332.0 ₹ 8.0
Investments purchased (₹ 3,700.0) (₹ 6,828.0) (₹ 4,972.0) (₹ 6,829.0) (₹ 7,857.0) (₹ 11,192.0) (₹ 7,542.0) (₹ 8,897.0) (₹ 13,617.0)
Investments sold ₹ 2,739.0 ₹ 6,927.0 ₹ 7,160.0 ₹ 6,404.0 ₹ 7,629.0 ₹ 11,170.0 ₹ 7,953.0 ₹ 7,777.0 ₹ 11,280.0
Interest received ₹ 78.0 ₹ 123.0 ₹ 63.0 ₹ 27.0 ₹ 78.0 ₹ 62.0 ₹ 122.0 ₹ 87.0 ₹ 78.0
Dividends received ₹ 3.0 ₹ 5.0 - - - ₹ 39.0 - - -
Investment in group cos - - - - - - - - -
Acquisition of companies - - (₹ 2.0) - - - - - -
Other investing items ₹ 25.0 (₹ 640.0) (₹ 2,920.0) ₹ 6.0 ₹ 4.0 (₹ 2.0) (₹ 1,540.0) ₹ 41.0 ₹ 29.0
Cash from Investing Activity - (₹ 2,370.0) (₹ 1,611.0) (₹ 1,889.0) (₹ 1,482.0) (₹ 769.0) (₹ 496.0) (₹ 2,255.0) (₹ 2,565.0) (₹ 4,109.0)
Proceeds from shares - - - - - - ₹ 27.0 ₹ 33.0 ₹ 37.0
Redemption of debentures - - - - - - - - -
Proceeds from borrowings ₹ 407.0 ₹ 3,126.0 ₹ 2,154.0 ₹ 1,891.0 - ₹ 424.0 ₹ 1,059.0 ₹ 352.0 -
Repayment of borrowings (₹ 373.0) (₹ 4,324.0) (₹ 522.0) (₹ 1,802.0) (₹ 1,518.0) (₹ 2,292.0) (₹ 374.0) - (₹ 1,938.0)
Interest paid fin (₹ 109.0) (₹ 92.0) (₹ 92.0) (₹ 133.0) (₹ 161.0) (₹ 161.0) (₹ 132.0) (₹ 134.0) (₹ 185.0)
Dividends paid (₹ 359.0) (₹ 411.0) (₹ 339.0) (₹ 399.0) (₹ 400.0) (₹ 392.0) (₹ 415.0) (₹ 415.0) (₹ 498.0)
Financial liabilities - - - - - (₹ 48.0) (₹ 75.0) (₹ 78.0) (₹ 102.0)
Other financing items - - (₹ 1,569.0) - (₹ 54.0) (₹ 47.0) (₹ 119.0) - -
Cash from Financing Activity - (₹ 434.0) (₹ 1,701.0) (₹ 368.0) (₹ 443.0) (₹ 2,133.0) (₹ 2,516.0) (₹ 29.0) (₹ 242.0) (₹ 2,686.0)

Net Cash Flow (₹ 279.0) (₹ 50.0) (₹ 112.0) (₹ 122.0) (₹ 31.0) (₹ 28.0) ₹ 1,286.0 ₹ 3.0 (₹ 907.0)
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

COMMON SIZE STATEMENT

Income Statement
Particulars Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Raw Material Cost 25.57% 24.76% 26.91% 28.58% 30.88% 31.57% 36.06% 36.18% 30.75%
Change in Inventory 0.37% 0.61% 0.87% 0.29% 1.78% -0.14% 4.15% 1.64% -0.29%
Power and Fuel 2.26% 2.02% 2.33% 2.31% 2.13% 1.80% 1.68% 1.81% 1.94%
Other Mfr. Exp 6.91% 6.60% 6.00% 12.23% 9.29% 8.25% 8.27% 7.44% 7.05%
Employee Cost 19.65% 20.07% 21.94% 22.55% 21.78% 19.36% 19.10% 18.09% 18.88%
Selling and admin 20.64% 19.26% 23.10% 14.70% 14.42% 12.41% 12.54% 13.76% 12.65%
Other Expenses 1.99% 4.86% 3.18% 3.46% 2.72% 12.34% 6.15% 6.87% 2.22%
Other Income 1.73% 1.89% 1.21% 1.09% 2.47% 3.82% 1.76% 2.57% 3.94%
Depreciation 5.06% 6.03% 7.23% 7.54% 7.35% 6.64% 6.45% 5.41% 5.07%
Interest 0.72% 0.53% 0.45% 0.55% 0.58% 0.56% 0.51% 0.44% 0.58%
Profit before tax 19.30% 18.36% 10.94% 9.46% 15.12% 10.76% 15.14% 14.21% 24.52%
Tax 3.75% 4.82% 2.09% 3.07% 2.50% -0.80% 4.89% 4.08% 6.25%
Net profit 15.55% 13.69% 9.10% 6.63% 12.62% 11.57% 10.25% 10.13% 18.27%
Dividend Amount 2.27% 2.19% 2.34% 2.32% 2.15% 2.37% 2.18% 2.32% 2.70%
EBITDA 25.08% 25.07% 18.87% 17.79% 23.04% 17.97% 22.10% 20.06% 30.16%
-
Balance Sheet
Particulars Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Total Liabilities 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Equity Share Capital 0.46% 0.42% 0.38% 0.37% 0.37% 0.36% 0.31% 0.28% 0.26%
Reserves 52.92% 61.41% 56.24% 55.88% 62.18% 66.81% 66.04% 64.31% 72.04%
Borrowings 23.37% 16.49% 22.71% 22.69% 17.12% 9.52% 11.40% 11.38% 4.18%
Other Liabilities 23.24% 21.68% 20.66% 21.06% 20.33% 23.31% 22.25% 24.03% 23.52%

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Net Block 29.13% 32.28% 32.01% 31.18% 32.08% 29.50% 30.86% 27.30% 28.62%
Capital Work in Progress 2.87% 3.80% 15.35% 15.53% 13.09% 6.61% 5.89% 4.35% 3.20%
Investments 12.18% 18.85% 9.74% 10.28% 11.54% 11.53% 8.32% 8.79% 15.48%
Other Assets 9.53% 9.77% 10.40% 10.68% 9.54% 14.73% 11.36% 11.87% 9.71%
Receivables 22.22% 20.29% 17.54% 18.13% 17.78% 21.65% 18.67% 22.45% 22.50%
Inventory 13.92% 12.58% 13.17% 13.02% 14.98% 15.10% 17.08% 17.11% 15.11%
Cash & Bank 10.14% 2.42% 1.78% 1.18% 0.99% 0.88% 7.82% 8.13% 5.37%
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

RATIO ANALYSIS
Years Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Trend Mean Median
Sales Growth - 3.80% -9.43% 0.48% 9.65% 14.89% 6.57% 14.02% 16.02% 7.00% 8.11%
EBITDA Growth - 2.99% -31.87% -5.19% 42.02% -11.59% 33.75% 2.69% 72.16% 13.12% 2.84%
EBT Growth - -1.41% -45.65% -13.08% 72.97% -19.27% 52.91% 6.17% 97.57% 18.78% 2.38%
Net Profit Growth - -9.79% -40.35% -27.43% 113.72% 3.90% -3.67% 11.83% 106.52% 19.34% 0.11%
Dividend Growth - 100.00% 100.06% 100.00% 99.88% 125.08% 100.06% 119.93% 133.41% 109.80% 100.06%
Gross Margin 46.89% 48.14% 44.37% 35.33% 39.21% 41.14% 40.09% 39.67% 43.33% 42.02% 41.14%
EBITDA Margin 24.65% 24.46% 18.40% 17.36% 22.49% 17.30% 21.72% 19.56% 29.02% 21.66% 21.72%
EBIT Margin 19.68% 18.54% 11.26% 9.90% 15.32% 10.91% 15.38% 14.29% 24.15% 15.49% 15.32%
EBT Margin 18.97% 18.02% 10.81% 9.35% 14.76% 10.37% 14.88% 13.85% 23.59% 14.96% 14.76%
Net Profit Margin 15.29% 13.29% 8.75% 6.32% 12.32% 11.14% 10.07% 9.88% 17.58% 11.63% 11.14%
S&G Exp % Sales 22.24% 23.68% 25.97% 17.97% 16.72% 23.83% 18.37% 20.11% 14.30% 20.35% 20.11%
Depreciation & Sales 4.97% 5.92% 7.15% 7.46% 7.17% 6.40% 6.34% 5.27% 4.88% 6.17% 6.34%
Operating Income % Sales 19.68% 18.54% 11.26% 9.90% 15.32% 10.91% 15.38% 14.29% 24.15% 15.49% 15.32%
Return on Capital Employed 21.23% 18.47% 9.41% 8.10% 13.57% 11.14% 14.42% 13.97% 25.13% 15.05% 13.97%
Retained Earning 85.41% 83.81% 73.62% 63.61% 82.97% 79.49% 78.68% 77.13% 85.22% 78.88% 79.49%
Return on Equity % 23.71% 16.77% 10.25% 7.26% 13.91% 12.99% 11.06% 11.36% 19.36% 14.07% 12.99%
Self Sustained Growth Rate 20.25% 14.05% 7.55% 4.62% 11.54% 10.32% 8.70% 8.76% 16.49% 11.37% 10.32%
Interest Coverage Ratio 27.80x 35.61x 25.51x 18.14x 27.27x 20.18x 30.73x 32.96x 43.36x 29.06x 27.80x
Debtor Turnover Ratio 3.73x 3.85x 3.78x 3.56x 3.97x 3.62x 3.90x 3.31x 3.54x 3.70x 3.73x
Creditor Turnover Ratio 3.56x 3.60x 3.21x 3.07x 3.47x 3.36x 3.28x 3.09x 3.38x 3.34x 3.36x
Inventory Turnover Ratio 3.16x 3.22x 2.80x 3.21x 2.87x 3.05x 2.56x 2.62x 2.99x 2.94x 2.99x
Fixed Asset Turnover Ratio 2.84x 2.42x 2.07x 2.07x 2.20x 2.65x 2.36x 2.72x 2.78x 2.46x 2.42x
Capital Turnover Ratio 1.55x 1.26x 1.17x 1.15x 1.13x 1.17x 1.10x 1.15x 1.10x 1.20x 1.15x
(In days)
Debtor Days 98 95 97 102 92 101 93 110 103 99 98
Creditor Days 102 101 114 119 105 109 111 118 108 110 109
Cash Conversion Cycle -5 -7 -17 -17 -13 -8 -18 -8 -5 -11 -8
CFO/Sales 16.52% 20.56% 14.93% 12.49% 18.14% 16.41% 18.42% 12.71% 22.96% 17.02% 16.52%
CFO/Total Assets 13.68% 16.04% 9.91% 8.07% 12.81% 12.85% 13.43% 9.45% 18.28% 12.72% 12.85%
CFO/Total Debt 58.53% 97.31% 43.61% 35.55% 74.80% 135.01% 117.79% 83.03% 437.05% 120.30% 83.03%
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

FORCASTING
Year Weight Year Sales Sales Growth Year Weight Year EBITDA EBITDA Growth
1 2015A 15,283.0 1 2015A 3,767.7
2 2016A 15,863.3 3.80% 2 2016A 3,880.3 2.99%
3 2017A 14,367.6 -9.43% 3 2017A 2,643.7 -31.87%
4 2018A 14,436.2 0.48% 4 2018A 2,506.4 -5.19%
5 2019A 15,829.5 9.65% 5 2019A 3,559.5 42.02%
6 2020A 18,187.0 14.89% 6 2020A 3,147.1 -11.59%
7 2021A 19,382.7 6.57% 7 2021A 4,209.3 33.75%
8 2022A 22,099.9 14.02% 8 2022A 4,322.4 2.69%
9 2023A 25,641.1 16.02% 9 2023A 7,441.5 72.16%
10 2024F 24,059.2 -6.17% 10 2024F 5,591.4 -24.86%
11 2025F 25,291.2 5.12% 11 2025F 5,921.3 5.90%
12 2026F 26,523.3 4.87% 12 2026F 6,251.2 5.57%
13 2027F 27,755.3 4.65% 13 2027F 6,581.1 5.28%
14 2028F 28,987.4 4.44% 14 2028F 6,911.0 5.01%
15 2029F 30,219.5 4.25% 15 2029F 7,240.9 4.77%

Sales Growth EBITDA Growth

40,000
8,000
30,000
6,000
20,000
4,000
10,000
2,000
0
0
2015A
2016A
2017A
2018A
2019A
2020A
2021A
2022A
2023A
2024F
2025F
2026F
2027F
2028F
2029F

2024F
2025F
2026F
2027F
2028F
2029F
2015A
2016A
2017A
2018A
2019A
2020A
2021A
2022A
Year Weight Year EBT EBT Growth Year Weight Year 2023A
EPS EPS Growth
1 2015A 2,899.6 1 2015A 137.1
2 2016A 2,858.8 -1.41% 2 2016A 123.5 -9.89%
3 2017A 1,553.7 -45.65% 3 2017A 75.9 -38.59%
4 2018A 1,350.4 -13.08% 4 2018A 55.0 -27.51%
5 2019A 2,335.8 72.97% 5 2019A 117.4 113.46%
6 2020A 1,885.7 -19.27% 6 2020A 121.9 3.83%
7 2021A 2,883.5 52.91% 7 2021A 117.4 -3.73%
8 2022A 3,061.4 6.17% 8 2022A 131.2 11.76%
9 2023A 6,048.5 97.57% 9 2023A 270.7 106.40%
10 2024F 4,130.7 -31.71% 10 2024F 186.7 -31.03%
11 2025F 4,404.0 6.62% 11 2025F 198.5 6.31%
12 2026F 4,677.3 6.21% 12 2026F 210.3 5.94%
13 2027F 4,950.6 5.84% 13 2027F 222.1 5.60%
14 2028F 5,223.9 5.52% 14 2028F 233.8 5.31%
15 2029F 5,497.2 5.23% 15 2029F 245.6 5.04%

EBT Growth EPS Growth

8,000 300
6,000 250
200
4,000 150
2,000 100
50
0 0
2024F
2025F
2026F
2027F
2028F
2029F
2015A
2016A
2017A
2018A
2019A
2020A
2021A
2022A
2023A

2015A
2016A
2017A
2018A
2019A
2020A
2021A
2022A
2023A
2024F
2025F
2026F
2027F
2028F
2029F
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

BETA REGRESSION
Regression Beta - 2 Years Weekly

DR REDDY'S LABORATORIES LTD Weekly Returns Nifty Returns Beta Drifiting

Date Closing Price Returns Closing Price Returns Levered Raw Beta 0.40
16-05-2022 4277.0 16584.3 Raw Beta Weight 75.00%
23-05-2022 4288.4 0.27% 16201.8 -2.31% Market Beta 1
30-05-2022 4086.5 -4.71% 15293.5 -5.61% Market Beta Weight 25.00%
06-06-2022 4247.1 3.93% 15699.3 2.65%
13-06-2022 4322.2 1.77% 15752.0 0.34% Adjusted Beta 0.55
20-06-2022 4342.2 0.46% 16220.6 2.97%
27-06-2022 4480.0 3.17% 16049.2 -1.06%
04-07-2022 4339.6 -3.14% 16719.4 4.18%
11-07-2022 4058.6 -6.47% 17158.3 2.62%
18-07-2022 4124.6 1.63% 17397.5 1.39%
25-07-2022 4227.7 2.50% 17698.2 1.73%
01-08-2022 4171.4 -1.33% 17758.4 0.34%
08-08-2022 4190.5 0.46% 17558.9 -1.12%
15-08-2022 4157.4 -0.79% 17539.4 -0.11%
22-08-2022 4222.1 1.55% 17833.3 1.68%
29-08-2022 4045.7 -4.18% 17530.8 -1.70%
05-09-2022 4107.1 1.52% 17327.3 -1.16%
12-09-2022 4302.1 4.75% 17094.3 -1.34%
19-09-2022 4342.7 0.94% 17314.7 1.29%
26-09-2022 4277.4 -1.50% 17185.7 -0.74%
03-10-2022 4297.2 0.46% 17576.3 2.27%
10-10-2022 4425.3 2.98% 17786.8 1.20%
17-10-2022 4490.0 1.46% 18117.2 1.86%
24-10-2022 4504.2 0.32% 18349.7 1.28%
31-10-2022 4374.8 -2.87% 18307.7 -0.23%
07-11-2022 4383.8 0.21% 18512.8 1.12%
14-11-2022 4475.4 2.09% 18696.1 0.99%
21-11-2022 4372.9 -2.29% 18496.6 -1.07%
28-11-2022 4275.7 -2.22% 18269.0 -1.23%
05-12-2022 4277.0 0.03% 17806.8 -2.53%
12-12-2022 4204.7 -1.69% 18105.3 1.68%
19-12-2022 4238.6 0.81% 17859.4 -1.36%
26-12-2022 4286.9 1.14% 17956.6 0.54%
02-01-2023 4316.8 0.70% 18027.7 0.40%
09-01-2023 4280.5 -0.84% 17604.3 -2.35%
16-01-2023 4324.5 1.03% 17854.1 1.42%
23-01-2023 4464.7 3.24% 17856.5 0.01%
30-01-2023 4475.4 0.24% 17944.2 0.49%
06-02-2023 4456.3 -0.43% 17465.8 -2.67%
13-02-2023 4403.5 -1.18% 17594.3 0.74%
20-02-2023 4361.4 -0.96% 17412.9 -1.03%
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

WACC
All figures are in INR unless stated otherwise.
Peer Comps
Debt/ Debt/ Levered Unlevered
Name Country Total Debt Total Equity Tax Rate 1 Equity Capital Beta
2
Beta
3

Sun Pharma.Inds. India 1,928.2 3,69,991.2 30.00% 0.52% 0.52% 0.36 0.36
Cipla India 559.4 1,16,463.0 30.00% 0.48% 0.48% 0.33 0.33
Zydus Lifesci. India 804.2 1,09,463.9 30.00% 0.73% 0.73% 0.52 0.52
Dr Reddy's Labs India 2,002.0 96,364.6 30.00% 2.08% 2.04% 0.55 0.54
Mankind Pharma India 8.6 83,532.4 30.00% 0.01% 0.01% 0.42 0.42
Average 0.76% 0.75% 0.44 0.43
Median 0.52% 0.52% 0.42 0.42

Cost of Debt Cost of Equity

Pre-tax Cost of Debt 8.00% Risk Free Rate 7.16%

Tax Rate 30.00% Equity Risk Premium 9.65%
4
After Tax Cost of Debt 5.60% Levered Beta 0.42
Cost of Equity 11.23%

Capital Structure Levered Beta

Current Target Comps Median Unlevered Beta 0.42
Total Debt 2,002.0 2.04% 0.75% Target Debt/ Equity 0.76%
Market Capitalization 96,364.6 97.96% 99.25% Tax Rate 30.00%
Total Capitalization 98,366.6 100.00% 100.00% Levered Beta 0.42

Debt / Equity 2.08% 0.76% Weighted Average Cost of Capital

1. Tax Rate considered as Marginal Tax Rate for the country Cost of Equity 11.23%
2. Levered Beta is based on 2 year weekly data Equity Weight 99.25%
3. Unlevered Beta = Levered Beta/(1+(1-Tax Rate) x Debt/Equity)
3. Levered Beta = Unlevered Beta/(1+(1-Tax Rate) x Debt/Equity) Cost of Debt 5.60%
Debt Weight 0.75%

WACC 11.19%
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124

DCF VALUATION
Calculation of PV of FCFF Mar-23A Mar-24F Apr-25F Apr-26F Apr-27F Apr-28F
EBIT 6,191.3 6,605.5 7,047.4 7,518.9 8,021.9 8,558.6
Tax Rate 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
EBIT (1-T) 4,333.9 4,623.8 4,933.2 5,263.2 5,615.3 5,991.0
1
Less: Reinvestment Rate 47.50% 47.50% 47.50% 47.50% 47.50% 47.50%
Free Cash Flow to Firm 2,275.3 2,427.5 2,589.9 2,763.2 2,948.0 3,145.3
Mid Year Convention 0.5 1.5 2.5 3.5 4.5
Discounting Factor 0.948 0.853 0.767 0.690 0.620
PV of FCFF 2302.1 2208.9 2119.5 2033.7 1951.4

1
Expected Growth 6.69%
2
Terminal Growth 6.80%
WACC 11.19% Sensitivity Analysis - Enterprise Value
WACC
Calculation of Terminal Value 58,023.99 10.59% 11.19% 12.00% 13.00%
5.00% 47891.2 44241.2 40357.1 36639.4
FCFF (N+1) 3355.7 6.80% 65617.4 58024.0 50652.2 44194.7
WACC 11.19% 7.00% 68685.7 60286.2 52253.7 45314.0
Terminal Growth 6.80% 8.00% 91148.6 75849.9 62663.2 52253.7
Terminal Value 76,414.6 GROWTH

Calculation of Equity Value

PV of FCC 10615.6 Sensitivity Analysis - Equity Value Per Share

PV of Terminal Value 47408.4 WACC
Enterprise Value 58024.0 3,507.93 10.59% 11.19% 12.00% 13.59%
Add: Cash 1730.2 5.00% 2899.4 2680.1 2446.9 2115.4
Less: Debt 1347.2 6.80% 3964.0 3507.9 3065.2 2500.8
Equity Value 58407.0 7.00% 4148.3 3643.8 3161.4 2556.6
No of Shares 16.7 8.00% 5497.4 4578.6 3786.6 2895.5
Equity Value per Share 3507.9 GROWTH
Share Price 6009.5
Premium/Discount 1.71x

Assumptions
1. The reinvestment rate and growth rate are taken from the NYU Stern report on the Indian sector, updated in January 2024.
2. The terminal growth rate is based on India's long term GDP growth rate.
 DR REDDY'S LABORATORIES LTD
NSE: DRREDDY| BSE: 500124
Amount in Crores

COMPARABLE COMPANY VALUATION

Market Data Financials Valuation

Share Share Equity Enterprise

Company Ticker Price Outstanding Value Net Debt Value Revenue EBITDA Net Income EV/Sales EV/EBITDA P/E
Sun Pharma.Inds. SUNPHARMA 1,541.0 239.9 3,69,720.1 (3,842.1) 3,65,878.1 47,444.6 13,911.6 8,934.2 7.71x 26.30x 41.38x
Cipla CIPLA 1,442.3 80.7 1,16,451.3 (315.6) 1,16,135.7 25,774.1 7,037.6 4,153.7 4.51x 16.50x 28.04x
Zydus Lifesci. ZYDUSLIFE 1,088.4 100.6 1,09,509.8 (300.9) 1,09,208.9 19,547.4 5,668.4 3,972.8 5.59x 19.27x 27.56x
Mankind Pharma MANKIND 2,084.9 40.1 83,521.1 274.3 83,795.4 9,264.8 8,842.1 1,823.4 9.04x 9.48x 45.80x
Dr Reddy's Labs DRREDDY 5,779.8 16.7 96,407.1 (752.4) 95,654.6 28,011.1 2,591.7 5,577.9 3.41x 36.91x 17.28x
High 9.04x 36.91x 45.80x
75th Percentile 7.71x 26.30x 41.38x
Average 6.05x 21.69x 32.01x
Median 5.59x 19.27x 28.04x
25th Percentile 4.51x 16.50x 27.56x
Low 3.41x 9.48x 17.28x

DR REDDY'S LABORATORIES LTD Comparable Valuation EV/Sales EV/EBITDA P/E

Implied Enterprise Value 2,65,067.2 2,68,025.3 2,46,631.7
Net Debt (3,842.1) (3,842.1) (3,842.1)
Implied Equity Value 2,68,909.2 2,71,867.4 2,50,473.8
Share Outstanding 239.9 239.9 239.9
Implied Value Per Share 1120.8 1133.1 1043.9
 DR REDDY'S LABORATORIES LTD
(NSE: DRREDDY| BSE: 500124)

INR 2362.55
52 Week (High - INR 1562 & Low - INR 754)

About the Company

Founded in 1984 by Dr. K. Anji Reddy, Dr. Reddy's Laboratories is a global pharmaceutical company headquartered in India. It develops,
manufactures, and markets a wide range of pharmaceuticals in India and internationally. With a strong focus on research and development, Dr.
Reddy's Laboratories produces a diverse portfolio of generic drugs, active pharmaceutical ingredients (APIs), and proprietary products.

Financial Summary

Revenue (INR Cr.) Net Profit (INR Cr.) Avg. Total Assets (INR Cr.)
4,507 8,670
25,641 8,164
22,100 7,528
7,021
19,383
18,187

2,026 2,183
1,952

2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023

Return on Equity Return on Assets Financial Leverage

14% 52% 0.31x

0.30x
0.29x
9%
8% 8% 29%
26% 27%

0.26x

2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023

Result Summary

• Dr. Reddy's Laboratories is likely focusing on expanding its biosimilars business, a high-growth segment in pharmaceuticals.
• The company might be looking for acquisitions or partnerships to strengthen its product portfolio.
• Dr. Reddy's stock price could see some volatility in the near future, but analysts are generally optimistic about its long-term
prospects.
• With a focus on affordability and accessibility of medications, Dr. Reddy's could be making strides in emerging markets.
 Dupont Analysis - Return on Equity & Return on Asset
Return on Equity (ROE)
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 912.4 1950.0 2026.0 1951.6 2182.5 4507.3
Average Shareholder Equity 18702.7 20309.4 22610.6 25441.1 28033.3 32892.3
Return on Equity 4.88% 9.60% 8.96% 7.67% 7.79% 13.70%

ROE - Dupont Equation

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 912.4 1950.0 2026.0 1951.6 2182.5 4507.3
Revenue 14436.2 15829.5 18187.0 19382.7 22099.9 25641.1
Net Profit Margin (A) 6.32% 12.32% 11.14% 10.07% 9.88% 17.58%

Revenue 14436.2 15829.5 18187.0 19382.7 22099.9 25641.1

Average Total Asset 6949.4 7079.5 7020.7 7528.0 8163.6 8670.3
Asset Turnover Ratio (B) 2.1X 2.2X 2.6X 2.6X 2.7X 3.0X

Average Total Asset 6949.4 7079.5 7020.7 7528.0 8163.6 8670.3

Average Shareholder Equity 18702.7 20309.4 22610.6 25441.1 28033.3 32892.3
Equity Multiplier (C) 0.4X 0.3X 0.3X 0.3X 0.3X 0.3X

Return on Equity (A*B*C) 4.88% 9.60% 8.96% 7.67% 7.79% 13.70%

Return on Assets
Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 912.4 1950.0 2026.0 1951.6 2182.5 4507.3
Average Total Asset 6949.4 7079.5 7020.7 7528.0 8163.6 8670.3
Return on Assets 13.13% 27.54% 28.86% 25.92% 26.73% 51.99%

ROA - Dupont Equation

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 912.4 1950.0 2026.0 1951.6 2182.5 4507.3
Revenue 14436.2 15829.5 18187.0 19382.7 22099.9 25641.1
Net Profit Margin (A) 6.32% 12.32% 11.14% 10.07% 9.88% 17.58%

Revenue 14436.2 15829.5 18187.0 19382.7 22099.9 25641.1

Average Total Asset 6949.4 7079.5 7020.7 7528.0 8163.6 8670.3
Asset Turnover Ratio (B) 2.1X 2.2X 2.6X 2.6X 2.7X 3.0X

Return on Assets (A*B) 13.13% 27.54% 28.86% 25.92% 26.73% 51.99%

Dupont Summary

Return on Equity: ROE fluctuated, starting at 4.88% in 2018, peaking at 13.70% in 2023, reflecting a general improvement in the company's
profitability or financial leverage.
Net Profit Margin: The net profit margin increased from 6.32% in 2018 to 17.58% in 2023, indicating an overall enhancement in profitability
relative to sales.
Asset Turnover Ratio: The asset turnover ratio increased from 2.1X in 2018 to 3.0X in 2023, suggesting improved efficiency in using assets to
generate revenue.
Equity Multiplier:The equity multiplier slightly decreased from 0.4X in 2018 to 0.3X in 2023, indicating a reduction in financial leverage over the
period.
Return on Assets: ROA significantly increased from 13.13% in 2018 to 51.99% in 2023, demonstrating a substantial improvement in the
company's efficiency in generating profits from its assets.
Disclaimer: This report is made as a part of educational assignment and is meant for educational purpose only. The author of this report is not
liable for any losses due to action taken basis this report. It is advisable to consult SEBI registered research analyst before making any
investments