The Dr. Reddy's Laboratories Limited (NSE:DRREDDY) Yearly Results Are Out And Analysts Have Published New Forecasts

Investors in Dr. Reddy's Laboratories Limited (NSE:DRREDDY) had a good week, as its shares rose 2.1% to close at ₹1,196 following the release of its yearly results. It was a credible result overall, with revenues of ₹326b and statutory earnings per share of ₹67.78 both in line with analyst estimates, showing that Dr. Reddy's Laboratories is executing in line with expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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Taking into account the latest results, the consensus forecast from Dr. Reddy's Laboratories' 36 analysts is for revenues of ₹354.6b in 2026. This reflects a notable 8.9% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 3.7% to ₹70.40. In the lead-up to this report, the analysts had been modelling revenues of ₹352.5b and earnings per share (EPS) of ₹71.61 in 2026. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

View our latest analysis for Dr. Reddy's Laboratories

There were no changes to revenue or earnings estimates or the price target of ₹1,272, suggesting that the company has met expectations in its recent result. 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 ₹1,600 per share, while the most pessimistic values it at ₹902. 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.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. 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 2026 expected to display 8.9% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this to the 170 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 10% per year. So it's pretty clear that, while Dr. Reddy's Laboratories' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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.

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 estimates - from multiple Dr. Reddy's Laboratories analysts - going out to 2028, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 1 warning sign for Dr. Reddy's Laboratories that you should be aware of.

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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.