Earnings Beat: Dr. Reddy's Laboratories Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Dr. Reddy's Laboratories Limited (NSE:DRREDDY) just released its latest quarterly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 4.3% to hit ₹72b. Dr. Reddy's Laboratories reported statutory earnings per share (EPS) ₹82.68, which was a notable 20% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Dr. Reddy's Laboratories

Taking into account the latest results, the current consensus from Dr. Reddy's Laboratories' 37 analysts is for revenues of ₹296.5b in 2025. This would reflect a solid 9.3% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 6.5% to ₹334. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹294.5b and earnings per share (EPS) of ₹324 in 2025. So the consensus seems to have become somewhat more optimistic on Dr. Reddy's Laboratories' earnings potential following these results.

There's been no major changes to the consensus price target of ₹5,958, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Dr. Reddy's Laboratories at ₹7,591 per share, while the most bearish prices it at ₹3,917. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's pretty clear that there is an expectation that Dr. Reddy's Laboratories' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 7.4% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. Factoring in the forecast slowdown in growth, it seems obvious that Dr. Reddy's Laboratories is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Dr. Reddy's Laboratories following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Dr. Reddy's Laboratories' revenue is expected to perform worse than the wider industry. The consensus price target held steady at ₹5,958, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Dr. Reddy's Laboratories. Long-term earnings power is much more important than next year's profits. We have forecasts for Dr. Reddy's Laboratories going out to 2026, and you can see them free on our platform here.

You can also see our analysis of Dr. Reddy's Laboratories' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.