2QFY2016 Result Update | Pharmaceutical

November 16, 2015

Dr Reddy’s Laboratories

BUY

CMP

`3,384

Performance Highlights

Target Price

`3,933

Y/E March (` cr)

2QFY2016 1QFY2016

% chg (qoq) 2QFY2015

% chg (yoy)

Investment Period

12 Months

Net sales

3,989

3,758

6.2

3,588

11.2

Gross profit

2,674

2,522

6.0

2,286

17.0

Stock Info

Operating profit

1,121

986

13.7

807

38.8

Sector

Pharmaceutical

Adj. net profit

722

625

15.5

574

25.7

Market Cap (` cr)

57,735

Source: Company, Angel Research

Net Debt (` cr)

(396)

For 2QFY2016, Dr Reddy’s Laboratories (DRL) posted in line sales while the net

Beta

0.8

profit growth exceeded our estimates. The company posted an 11.2% yoy growth

52 Week High / Low

4,383/3,010

in sales to `3,989cr V/s `4,000cr expected and V/s `3,588cr in 2QFY2015,

Avg. Daily Volume

26,988

mainly driven by global generics. On the operating front, the EBIT margin came

Face Value (`)

in at 22.4% V/s 18.7% expected and V/s 17.3% in 2QFY2015, driven by the

BSE Sensex

25,611

expansion in gross margins (285bps) and SG&A and R&D expenditure growing

Nifty

7,762

only moderaly, which is by 3.6% and 8.8% yoy, respectively. Thus, the net profit

Reuters Code

REDY.BO

came in at `722cr V/s `631cr expected and V/s `574cr in 2QFY2015, a yoy growth

Bloomberg Code

DRRD@IN

of 25.7%. After the warning letters for its three facilities, the stock has corrected,

making valuations attractive. Thus we recommend a Buy rating on the stock.

Shareholding Pattern (%)

Results better on operating front: The company posted an 11.2% growth in sales

Promoters

25.5

to `3989cr V/s `4,000cr expected and V/s `3,588cr in 2QFY2015, mainly driven

MF / Banks / Indian Fls

8.8

by global generics. Global generics (`3,276.8cr) posted a growth of 15% yoy,

FII / NRIs / OCBs

58.0

while PSAI (`591.8cr) posted a dip of 7% yoy. In global generics, the key markets-

USA, Europe, India and Emerging markets, posted a growth of 32%, 65%, 14%

Indian Public / Others

7.7

and -22% yoy, respectively. On the operating front, the EBIT margin came in at

22.4% V/s 18.7% expected and V/s 17.3% in 2QFY2015, driven by expansion in

Abs. (%)

3m 1yr

3yr

gross margins (285bps) and moderate growth in SG&A and R&D expenditure,

Sensex

(7.0)

(8.3)

37.6

which rose by 3.6% and 8.8% yoy, respectively. Thus, the net profit came in at

Dr Reddy

(21.1)

(2.6)

92.8

`722cr V/s `631cr expected and V/s `574cr in 2QFY2015, a yoy growth of 25.7%.

Outlook and valuation: We expect net sales to grow at a CAGR of 14.9% to

3-year Daily Price Chart

`19,575cr and adjusted EPS to record a

17.2% CAGR to

`178.8 over

5,000

FY2015-17E. On back of valuations, we recommend a Buy rating on the stock.

4,500

4,000

3,500

Key financials (IFRS Consolidated)

3,000

Y/E March (` cr)

FY2014

FY2015

FY2016E

FY2017E

2,500

2,000

Net sales

13,217

14,819

16,838

19,575

1,500

% chg

13.7

12.1

13.6

16.3

1,000

Net profit

2,151

2,218

2,585

3,046

500

% chg

28.2

3.1

16.5

17.9

Adj net profit

2,151

2,218

2,585

3,046

% chg

22.9

3.1

16.5

17.9

Adj. EPS (`)

126.7

130.2

151.7

178.8

Source: Company, Angel Research

EBITDA margin (%)

23.6

22.2

23.0

23.1

P/E (x)

26.7

26.0

22.3

18.9

RoE (%)

26.3

21.9

21.1

20.8

RoCE (%)

20.2

18.1

18.8

19.5

P/BV (x)

6.3

5.2

4.3

3.6

Sarabjit Kour Nangra

EV/Sales (x)

4.4

3.9

3.4

2.8

+91 2 39357600 Ext: 6806

EV/EBITDA (x)

18.7

17.4

14.7

12.3

[email protected]

Source: Company, Angel Research; Note: CMP as of November 13, 2015

Please refer to important disclosures at the end of this report

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Exhibit 1: 2QFY2016 performance (IFRS, consolidated)

Y/E March (` cr)

2QFY2016

1QFY2016

% chg (qoq) 2QFY2015

% chg (yoy) 1HFY2016

1HFY2015

% chg

Net sales

3,989

3,758

6.2

3,588

11.2

7,747

7,105

9.0

Other income

(70)

(84.8)

135

(67.0)

Total income

3,999

3,792

5.5

3,657

9.4

7,791

7,240

7.6

Gross profit

2,694

2,522

6.8

2,286

17.8

5,215

4,566

14.2

Gross margin (%)

67.5

67.1

63.7

67.3

64.3

SG&A expenses

1,106

1,097

0.8

1,067

3.6

2,203

2,135

3.2

R&D expenses

447

439

2.0

411

8.8

886

799

10.9

EBDITA

1,140

986

15.7

807

41.3

2,126

1,632

30.3

EBDITA (%)

28.6

26.2

22.5

27.4

23.0

Depreciation

247

227

8.7

187.2

31.7

473.4

382.9

(51.1)

Interest

PBT

904

793

14.1

689

31.3

1,697

1,384

(50.2)

Tax

188

172

9.2

120

57.1

360

270

33.3

Net Profit

716

621

15.4

569

25.9

1,337

1,114

20.0

Share of profit/ (loss) in associates

4.4

0.0

5.1

8.8

10.6

Reported net profit before exceptional

722

626

15.4

574

25.7

1,348

1,125

19.8

Exceptional items (loss) /profit

Reported PAT

722

625

15.5

574

25.7

1,348

1,125

19.8

Adj.Net Profit

722

625

15.5

574

25.7

1,348

1,125

19.8

EPS (`)

42.5

36.8

33.8

79.4

66.2

Source: Company, Angel Research

Exhibit 2: Actual vs Estimates

(` cr)

Actual

Estimates

Variation (%)

Net sales

3,989

4,000

(0.3)

Other income

(84.8)

Operating profit

1,121

746

50.1

Tax

188

184

2.1

Adj. Net profit

722

631

14.4

Source: Company, Angel Research

Revenue just in line with expectation: The company posted an 11.2% growth in

sales to `3989cr V/s `4,000cr expected and V/s `3,588cr in 2QFY2015, mainly

driven by global generics. Global generics (`3,276.8cr) posted a growth of 15%

yoy, while PSAI (`591.8cr) posted a dip of 7% yoy. In global generics, the key

markets- USA, Europe, India and Emerging markets, posted a growth of 32%,

65%, 14% and -22% yoy, respectively.

In the generic segment (accounting for 82% of sales), the US (`1,856cr) grew by

32% yoy, Europe

(`212cr) grew by

65.0% yoy, India

(`546cr) grew by

14.0% yoy, while Emerging Markets (including Russia & CIS; `662cr) de-grew by

22% yoy. Russia & CIS (~`390cr) dipped by 18.6% yoy. Revenue from Russia

declined primarily on account of the Rouble’s depreciation. In constant currency

terms, the growth was of ~11% yoy for 2QFY2016. Revenue from Rest of the

World (RoW) territories, at ~`270cr, recorded a yoy de-growth of 24%.

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

In the PSAI segment (15% of sales) - US de-grew by 47% and ROW grew by 26%.

Europe de-grew by 5% while India dipped by 19% yoy, during the quarter.

Proprietary Products & Others (`120cr) posted a yoy growth of 37%.

DRL filed 2 abbreviated new drug applications (ANDAs) during the quarter. The

company has 76 ANDAs pending for approval with the USFDA, of which, 50 are

Para IVs and 18 are FTFs.

Exhibit 3: Trend in Global generics

3,500

272

3,000

383

347

270

390

329

310

478

329

2,500

479

476

546

474

433

2,000

191

212

480

195

234

1,500

143

1,000

1,852

1,856

1,682

1,715

1,429

500

2QFY2015

3QFY2015

4QFY2015

1QFY2016

2QFY2016

North America

Europe

India

Russia & CIS

Others

Source: Company, Angel Research

In the PSAI segment (15% of sales) - US de-grew by 47% and ROW grew by 26%.

Europe de-grew by 5% while India dipped by 19% yoy, during the quarter.

Proprietary Products & Others (`120cr) posted a yoy growth of 37%.

Exhibit 4: PSAI trend

800

700

212

600

158

175

500

66.8

208

201

400

202

300

322

206

200

149

235

243

100

130

136

140

2QFY2015

3QFY2015

4QFY2015

1QFY2016

2QFY2016

North America

Europe

India

Others

Source: Company, Angel Research

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

EBITDA expands yoy: On the operating front, the EBITDA margin came in at 28.6%

V/s 24.8% expected V/s 22.5% in 2QFY2015, driven by the expansion in gross

margins (285bps) and moderate growth in SG&A and R&D expenditure, which

rose by 3.6% and 8.8% yoy, respectively. The expansion in gross margins is on

back of improved sales mix (with formulations at 82% of sales in 2QFY2016 V/s

80% in 2QFY2015).

Exhibit 5: EBITDA margin trend (%)

30.0

28.6

28.0

26.2

26.0

24.0

23.0

22.5

22.0

21.0

20.0

18.0

2QFY2015

3QFY2015

4QFY2015

1QFY2016

2QFY2016

Source: Company, Angel Research

Net profit lower than expected: Consequently, the net profit came in at `722cr

V/s `631cr expected and V/s `574cr in 2QFY2015, a yoy growth of 25.7%.

Other income during the quarter came in at `10cr V/s `69cr in 2QFY2015,

which led the PAT to grow at a lower rate than the operating profit growth rate

during the period.

Exhibit 6: Adjusted net profit trend

800

722

750

700

626

650

574

575

600

519

550

500

450

400

350

300

250

200

150

100

2QFY2015

3QFY2015

4QFY2015

1QFY2016

2QFY2016

Source: Company, Angel Research

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Concall takeaways

 DRL spends 12-15% of its R&D expenditure on biosimilars.

 Russia business is to see revival in 2HFY2016.

 Improvement in SG&A is likely to be sustainable.

 Dr Reddy’s has received a warning letter issued by the USFDA, relating to its three

plants Srikakulam, and Miryalaguda, Telegana along with the oncology

formulation business at Duvvada. The company has said that these facilities

contribute around 10-12% of sales of the company. Though it cannot be ruled but

probability of adverse action at Bachupally plant (which got inspected by USFDA

in June 2015 with some 483 observations) is low now as it did not receive

warning letter along with above mentioned facilities. This is a key facility for DRRD

as it contributes >50% to current US sales. Moreover, these observations are

minor.

 USFDA needs DRL to focus on third party verification and implementation across

the manufacturing network. The company has not done any third party verification

till date.

 DRL plans to arrest the impact partially by initiating site transfers from its API

plants (though this may lead to delay of 6-9 months). DRL generates ~20% of its

US sales currently from Oncology segment but exposure to current sales from

Duvvada facility is limited. This is because most of the supply comes from third

party sources.

 The Gleevec API is outsourced from the third party and the company is expected to

launch this product post Sun Pharma’s exclusivity.

Investment arguments

Robust growth in the US, going ahead: After attaining a critical mass

(US$1,113mn in FY2015), DRL aims to scale up its business to the next orbit in the

US market on the back of a strong product pipeline (76 ANDAs are pending

approval, of which, 50 are Para IVs and 18 are FTFs). The Management has

guided for a robust growth in the US over the medium term, driven by introduction

of new products, some of which are also Para IV opportunities. On back of the

import alert on the three facilities of the company, on worst case scenario, we

expect the ex-exclusivity US sales to post a CAGR of ~15.7% during FY2015-17E.

Domestic back in focus: DRL reported a 14.0% yoy growth in FY2015. The

Management expects the company’s performance to rebound and targets to

achieve an above industry growth rate going ahead, driven by a) field force

expansion and improvement in productivity, b) new product launches (including

biosimilars) and c) focus on brand building. In 4QFY2015, DRL had acquired

UCB’s India portfolio and has completed the integration process of these brands in

1QFY2016. UCB’s India business had registered ~`150cr sales in CY2014 and

has a branded portfolio of

21 products focusing on Allergy, Respiratory,

Dermatology and Pediatric space. Thus, we expect sales in India to post a CAGR of

~20.1% over FY2015-17E.

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Exhibit 9: Recommendation summary

Company

Reco.

CMP Tgt Price Upside

FY2017E

FY15-17E

FY2017E

(`)

(%)

EV/Sales

EV/EBITDA

CAGR in EPS

RoCE

RoE

(x)

(%)

Alembic Pharma

Neutral

662

27.7

3.9

19.5

26.1

30.3

30.2

Aurobindo Pharma Accumulate

830

872

5.1

19.0

3.1

13.3

16.3

23.4

30.2

Cadila Healthcare Neutral

413

23.5

3.5

16.1

24.6

25.2

29.0

Cipla

Neutral

619

21.4

2.9

15.3

21.4

17.1

16.8

Dr Reddy's

Buy

3,384

3,933

16.2

18.9

2.8

14.7

17.2

19.1

20.6

Dishman Pharma Neutral

381

17.6

1.7

8.2

20.4

11.7

GSK Pharma*

Neutral

3,152

46.2

8.0

36.4

6.6

33.7

34.3

Indoco Remedies

Neutral

300

22.1

2.4

13.1

23.0

19.7

Ipca labs

Buy

719

900

25.1

25.7

2.6

13.7

17.9

11.8

14.0

Lupin

Neutral

1,777

26.0

4.5

16.6

13.1

29.6

24.7

Sanofi India*

Neutral

4,586

30.3

4.0

19.0

33.1

27.9

25.5

Sun Pharma

Buy

742

950

28.1

27.6

4.8

15.6

8.4

15.8

16.6

Source: Company, Angel Research; Note: *December year ending

Company Background

Established in

1984, Dr Reddy's Laboratories is an integrated global

pharmaceutical company, through its three businesses - Pharmaceutical Services

and Active Ingredients, Global Generics and Proprietary Products. The key

therapeutic focus is on gastro-intestinal, cardiovascular, diabetology, oncology,

pain management, anti-infective and paediatrics. The key markets for DRL include

India, USA, Russia & CIS, and Germany.

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Profit & loss statement (IFRS Consolidated)

Y/E March (` cr)

FY2012

FY2013

FY2014

FY2015

FY2016E

FY2017E

Net sales

9,674

11,627

13,217

14,819

16,838

19,575

Other operating income

76.5

247.9

141.6

91.7

Total operating income

9,750

11,875

13,359

14,911

16,930

19,666

% chg

29.2

21.8

12.5

11.6

13.5

16.2

Total expenditure

7,076

8,951

10,096

11,535

12,627

15,061

Cost of revenues

3,598

4,825

4,977

5,531

5,808

7,133.31

SG&A expenses

2,887

3,358

3,878

4,259

4,833

5,618

R&D expenses

591.1

767.3

1,240.2

1,744.9

1,986.9

2,309.8

EBITDA

2,598

2,676

3,121

3,284

4,211

4,514

% chg

65.9

3.0

16.6

5.2

28.2

7.2

(% of Net Sales)

26.9

23.0

23.6

22.2

25.0

23.1

Depreciation & amortisation

745.4

743.7

659.8

747.4

927.4

990.1

EBIT

1,853

1,932

2,462

2,537

3,283

3,523

% chg

60.9

4.3

27.4

3.1

29.4

7.3

(% of Net Sales)

19.2

16.6

18.6

17.1

19.5

18.0

Interest & other charges

(16.0)

Other Income

46.0

40.0

168.2

(% of PBT)

2.1

1.5

6.0

4.7

4.4

Share in profit of associates

5.4

10.4

17.4

19.5

Recurring PBT

1,951

2,237

2,661

2,816

3,563

3,803

% chg

61.5

14.7

19.0

5.9

26.5

6.7

Extraordinary expense/(Inc.)

104.0

68.8

PBT (reported)

1,846.6

2,167.7

2,660.6

2,816.3

3,562.9

3,802.8

Tax

420.4

490.0

509.4

598.4

708.7

756.7

(% of PBT)

22.8

22.6

19.1

21.2

19.9

PAT (reported)

1,426.2

1,677.7

2,151.2

2,217.9

2,854.2

3,046.2

Add: Share of earnings of asso.

Less: Minority interest (MI)

Exceptional items

PAT after MI (reported)

1,426.2

1,677.7

2,151.2

2,217.9

2,854.2

3,046.2

ADJ. PAT

1,496.0

1,750.0

2,151.2

2,217.9

2,854.2

3,046.2

% chg

39.0

17.0

22.9

3.1

28.7

6.7

(% of Net Sales)

14.7

14.4

16.3

15.0

17.0

15.6

Basic EPS (`)

88.2

103.1

126.7

130.2

167.5

178.8

Fully Diluted EPS (`)

88.2

103.1

126.7

130.2

167.5

178.8

% chg

38.4

16.8

22.9

2.7

23.3

18.1

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Balance sheet (IFRS Consolidated)

Y/E March (` cr)

FY2012

FY2013

FY2014

FY2015

FY2016E FY2017E

SOURCES OF FUNDS

Equity share capital

84.8

84.9

85.2

Preference Capital

Reserves & surplus

5,660

7,224

8,995

11,045

13,500

16,148

Shareholders funds

5,744

7,309

9,080

11,130

13,586

16,233

Minority Interest

Total loans

4,831.2

3,676.0

4,474.2

3,954.3

Deferred tax liability

83.3

(192.9)

(401.3)

Total liabilities

10,659

11,068

13,361

14,683

17,139

19,786

APPLICATION OF FUNDS

Net fixed assets

3,325

3,781

3,945

4,314

5,314

6,314

Goodwill /other intangibles

1,353

1,402

1,470

1,643

Capital Work-in-Progress

520.8

495.2

Investments

1,077

1,764

2,589

3,811

Current Assets

6,995

6,875

7,866

8,558

10,511

12,909

Cash

737.9

513.6

845

539

1,427

2,355

Loans & Advances

580.4

697.6

793.0

889.1

1,010.3

1,174.5

Other

5,677

5,664

6,228

7,129

8,074

9,379

Current liabilities

2,613

3,252

3,006

4,214

4,639

5,389

Net Current Assets

4,382

3,623

4,860

4,344

5,873

7,520

Other Assets

Total Assets

10,659

11,068

13,361

14,683

17,139

19,786

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Cash flow statement (IFRS Consolidated)

Y/E March (` cr)

FY2012

FY2013

FY2014

FY2015

FY2016E FY2017E

Profit before tax

1,951

2,237

2,661

2,816

3,563

3,803

Depreciation

745

744

660

747

927

990

(Inc)/Dec in Working Capital

(1,661)

535

(906)

211

(641)

(719)

Less: Other income

168

Direct taxes paid

420

490

509

598

709

757

Cash Flow from Operations

614

2,980

1,865

3,008

2,973

3,149

(Inc.)/Dec.in Fixed Assets

(881)

(431)

(164)

(369)

(1,000)

(Inc.)/Dec. in Investments

(1,046)

687

824

1,222

Other income

168

Cash Flow from Investing

(1,928)

302

701

1,021

(832)

Issue of Equity

Inc./(Dec.) in loans

2,474

(1,155)

798

(520)

Dividend Paid (Incl. Tax)

259

298

358

399

Others

(1,255)

(2,649)

(3,390)

(4,214)

(1,652)

(1,788)

Cash Flow from Financing

1,478

(3,506)

(2,234)

(4,335)

(1,253)

(1,389)

Inc./(Dec.) in Cash

165

(224)

331

(306)

888

928

Opening Cash balances

573

738

514

845

539

1,427

Closing Cash balances

738

514

845

539

1,427

2,355

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Key ratios

Y/E March

FY2012

FY2013

FY2014

FY2015

FY2016E

FY2017E

Valuation Ratio (x)

P/E (on FDEPS)

38.4

32.8

26.7

26.0

20.2

18.9

P/CEPS

26.4

23.7

20.4

19.4

15.2

14.3

P/BV

10.0

7.9

6.3

5.2

4.2

3.6

Dividend yield (%)

0.4

EV/Sales

6.2

5.1

4.4

3.9

3.3

2.8

EV/EBITDA

23.3

22.0

18.7

17.4

13.4

12.3

EV / Total Assets

5.7

5.3

4.4

3.9

3.3

2.8

Per Share Data (`)

EPS (Basic)

88.2

103.1

126.7

130.2

167.5

178.8

EPS (fully diluted)

88.2

103.1

126.7

130.2

167.5

178.8

Cash EPS

128.0

142.6

165.5

174.0

222.0

236.9

DPS

14.0

15.0

Book Value

338.7

430.4

534.7

653.3

797.4

952.8

Dupont Analysis

EBIT margin

19.2

16.6

18.6

17.1

19.5

18.0

Tax retention ratio

77.2

77.4

80.9

78.8

80.1

Asset turnover (x)

1.2

1.1

1.2

ROIC (Post-tax)

17.5

14.9

17.4

15.1

17.7

17.1

Cost of Debt (Post Tax)

0.0

Leverage (x)

0.6

0.4

0.2

0.1

Operating ROE

27.2

23.5

24.7

20.4

22.1

19.5

Returns (%)

ROCE (Pre-tax)

20.9

17.8

20.2

18.1

20.6

19.1

Angel ROIC (Pre-tax)

29.6

23.1

25.6

22.5

25.7

24.4

ROE

28.9

26.8

26.3

21.9

23.1

20.4

Turnover ratios (x)

Asset Turnover (Gross Block)

3.4

3.3

3.5

3.6

3.5

3.4

Inventory / Sales (days)

Receivables (days)

101

Payables (days)

WC cycle (ex-cash) (days)

105

104

Solvency ratios (x)

Net debt to equity

0.7

0.4

0.3

0.2

0.1

Net debt to EBITDA

1.6

1.2

1.0

0.6

0.4

Interest Coverage (EBIT / Int.)

November 16, 2015

Dr. Reddy’s Laboratories | 2QFY2016 Result Update

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

DISCLAIMER

Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,

Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited. It is also registered as a Depository Participant with

CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is

a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number

INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing

/dealing in securities Market. Angel or its associates including its relatives/analyst do not hold any financial interest/beneficial

ownership of more than 1% in the company covered by Analyst. Angel or its associates/analyst has not received any compensation /

managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. Angel/analyst

has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity

of the company covered by Analyst.

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment

decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should

make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the

companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine

the merits and risks of such an investment.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable

sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this

document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way

responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.

Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot

testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.

While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be

regulatory, compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

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Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from

or in connection with the use of this information.

Note: Please refer to the important ‘Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the

latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may

have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement

Dr. Reddy’s Laboratories

1. Analyst ownership of the stock

2. Angel and its Group companies ownership of the stock

3. Angel and its Group companies' Directors ownership of the stock

4. Broking relationship with company covered

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Based on expected returns

Buy (> 15%)

Accumulate (5% to 15%)

Neutral (-5 to 5%)

over 12 months investment period):

Reduce (-5% to -15%)

Sell (< -15%)

November 16, 2015