1:5 Stock Split By Large-Cap Pharma Stock; Record Date - Oct 28: Buy Dr Reddy's For Rs 7,300 Target

Dr Reddy's Laboratories, a large-cap pharma stock, is going to split up in the ratio of 1:5 before the Diwali festival, and eventually become cheaper for new and existing investors. This will be the pharma giant's second stock split, but first in 23 years. There is room to buy in Dr Reddy's Lab before Q2 results, as brokerage Phillip Capital is optimistic about the company and sets a Rs 7,300 target price.

There is the potential for a nearly 11% rise in Dr Reddy's Lab stock ahead.

Dr Reddy's Laboratories Share Price:

This pharma stock is at Rs 6601.25 apiece on BSE, with a market cap of Rs 1,10,154.49 crore. The stock's 52-week high and low is at Rs 7,101 apiece and Rs 5,212.10 apiece respectively.

Its price-to-equity ratio is at 26.73x, and its return on equity is at 17%.

YTD, Dr Reddy's share have zoomed by over 13.5% on BSE as of now. In a year, the upside is about nearly 21%. Meanwhile, in 5 years span, Dr Reddy's soared by 149.39%, making it a multi-bagger.

Dr Reddy's Laboratories Stock Split:

Dr Reddy's is set to split by a 1:5 ratio. For that, it has fixed Monday, October 28, 2024, as the "Record Date" for determining entitlement of Equity Shareholders for sub-division/ split of each equity share of Rs. 5/- (Rupees five only) each, fully paid-up into 5 (five) equity shares of Re. 1/- (Rupee one only) each, fully paid up.

To be eligible, investors should hold Dr Reddy's shares by end of record date.

This will be the second split by Dr Reddy. The first time this pharma stock split was in October 2001, in the ratio of 1:2, where its face value of Rs 10 was cut to Rs 5.

BUY Dr Reddy's Lab Stock:

Brokerage Phillip Capital has recommended BUY on Dr Reddy's stock for a target price of Rs 7,300.

In Q2FY24, the brokerage is expecting 13% growth in Dr Reddy's revenue led by steady growth in US base business sales, and strong Revlimid (at ~US$160mn vs US$130mn last year), 15% growth in India (complemented by licensing of Sanofi's vaccine portfolio and JV with Nestle Healthcare).

Also, Phillip Capital predicts margins to correct 300bps yoy mainly due to higher R&D spending and increased overheads despite rising Revlimid contribution, leading to a muted EBITDA performance. It added that due to higher opex and R&D spending, the resultant PAT is expected to decline by 4% yoy.

About Dr Reddy's Lab:

Dr Reddy's Laboratories is a global pharmaceutical company headquartered in Hyderabad, India. Established in 1984, we are committed to providing access to affordable and innovative medicines. Driven by its purpose of 'Good Health Can't-Wait', the company offers a portfolio of products and services including APIs, generics, branded generics, biosimilars and OTC. Its major therapeutic areas of focus are gastrointestinal, cardiovascular, diabetology, oncology, pain management and dermatology. Meanwhile, the company's major markets include - USA, India, Russia & CIS countries, China, Brazil and Europe. As a company with a history of deep science that has led to several industry firsts, we continue to plan ahead and invest in businesses of the future.