Dr. Reddy's Laboratories Limited Just Missed EPS By 12%: Here's What Analysts Think Will Happen Next

Dr. Reddy's Laboratories Limited (NSE:DRREDDY) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was not a great result overall. Although revenues beat expectations, hitting ₹80b, statutory earnings missed analyst forecasts by 12%, coming in at just ₹15.05 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Dr. Reddy's Laboratories

After the latest results, the 37 analysts covering Dr. Reddy's Laboratories are now predicting revenues of ₹320.9b in 2025. If met, this would reflect a credible 7.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to accumulate 9.4% to ₹70.03. Before this earnings report, the analysts had been forecasting revenues of ₹315.0b and earnings per share (EPS) of ₹67.77 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The consensus price target was unchanged at ₹1,335, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Dr. Reddy's Laboratories analyst has a price target of ₹1,655 per share, while the most pessimistic values it at ₹969. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Dr. Reddy's Laboratories'historical trends, as the 14% annualised revenue growth to the end of 2025 is roughly in line with the 12% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 11% per year. So although Dr. Reddy's Laboratories is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Dr. Reddy's Laboratories' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Dr. Reddy's Laboratories analysts - going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Dr. Reddy's Laboratories you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.