Dr. Reddy's Laboratories Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Investors in Dr. Reddy's Laboratories Limited (NSE:DRREDDY) had a good week, as its shares rose 5.5% to close at ₹1,311 following the release of its quarterly results. It looks like a credible result overall - although revenues of ₹87b were in line with what the analysts predicted, Dr. Reddy's Laboratories surprised by delivering a statutory profit of ₹11.10 per share, a notable 10% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the most recent consensus for Dr. Reddy's Laboratories from 36 analysts is for revenues of ₹351.1b in 2027. If met, it would imply a satisfactory 6.4% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 33% to ₹44.74. Before this earnings report, the analysts had been forecasting revenues of ₹351.9b and earnings per share (EPS) of ₹44.27 in 2027. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
View our latest analysis for Dr. Reddy's Laboratories
With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 5.2% to ₹1,351. It looks as though they previously had some doubts over whether the business would live up to their expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Dr. Reddy's Laboratories at ₹1,740 per share, while the most bearish prices it at ₹1,045. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Dr. Reddy's Laboratories shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Dr. Reddy's Laboratories'historical trends, as the 13% annualised revenue growth to the end of 2027 is roughly in line with the 11% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% annually. So although Dr. Reddy's Laboratories is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous 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 also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Dr. Reddy's Laboratories going out to 2029, and you can see them free on our platform here.
You still need to take note of risks, for example - Dr. Reddy's Laboratories has 1 warning sign we think you should be aware of.
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