Dr Reddy's Labs (DRREDDY)

FairStock Score: 63/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I am a value investor first, so I ask whether Dr Reddy's Labs is a wonderful business at a fair price. At ₹1,200, market cap ₹99,960 Cr, P/E 30.21, P/B 2.61, and book value ₹460.31, I see a mature pharmaceuticals stalwart, not a bargain. Graham Number is ₹777.45, so the margin of safety is -65.45%—the price is well above intrinsic asset-based value. ROCE 22.69% and debt/equity 0.19 suggest decent capital efficiency and a strong balance sheet; Altman Z-Score 3.30 and Piotroski F-Score 7/9 support that. But ROE 8.84% is only modest, and free cash flow is -₹1,142 Cr, so reported profits are not yet translating into owner cash. Growth is mixed: five-year revenue CAGR 13.26% is respectable, yet recent sales fell 32.05% and profit dropped 86.33%. The latest quarter showed ₹8,753 Cr sales and ₹1,190 Cr net profit, so the business is still profitable, but the trend demands caution. Dividend yield is only 0.67%, giving little income support. Valuation is rich for the current earnings trajectory: P/E 30.21, EV/EBITDA 32.82, PEG 18.65. A stalwart can deserve a premium if it compounds steadily, but here the recent numbers don't show that. Promoter holding 26.64% is not a controlling majority, which I note. FairStock Score 63/100 (STEADY) hints at stability, not excitement. I would wait for a wider margin of safety, positive FCF, and a return to sales and profit growth before getting interested. Until then, this is a watchlist candidate, not a buy.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer