Information About Dr.Reddy's:

Dr. Reddy's Pharmaceuticals is an Indian multinational pharmaceutical company with presence in more than 80 countries across the world. The company presently offers more than 200 generic versions of expensive medicines at just a fraction of a cost. Its comprehensive portfolio includes capsules, tablets, injectables, and topical creams across the therapeutic areas like pediatrics, dermatology, cardiovascular disease, pain management, gastrointestinal problems, and anti-infection.

History of Dr.Reddy's:

Dr. Reddy's Laboratories was launched in the year 1984. Back then, the company was focussed on producing only active pharmaceutical ingredients. Two years later, the company started its operations with emphasis on branded formulations. It launched a couple of brands in India over the next few years and inspired by their success in the domestic markets, and it soon expanded its operations internationally. The late 1990s saw Dr. Reddy's Laboratories enter highly-regulated markets like the United States. This decade also saw the organization commence the production of generics by filing an Abbreviated New Drug Application in the USA. From the last ten years, the company has focussed on improving and strengthening its product offerings and solidifying its position internationally.

Management of the Company:

Mr. Satish Reddy - Chairman

Mr. Reddy is presently serving as the Chairman of Dr. Reddy's Laboratories. He has been a part of the organization since 1993 when he joined as an Executive Director. Over the years, he moved up in the ranks and held various key positions like Managing Director and Vice-Chairman. He has been instrumental in formulating policies concerning the pharmaceutical sector and the economy. He has served as a member of the Drugs Technical Advisory Board of India and also the President of the Indian Pharmaceutical Alliance. He also oversaw the expansion of the company into international markets like Russia and the Commonwealth of Independent States.

Mr. G V Prasad - Co-Chairman & Chief Executive Officer

Mr. Prasad has played an essential role in transforming the company from a domestic entity into an international pharmaceutical giant. He has been a part of the Board of Directors since the company's early years. During his tenure that spans across almost 30 years, he has improved the revenues of the company from a mere $50 million to more than $2.5 billion. It was under his leadership that the company expanded globally by capitalizing on the opportunities in developed and emerging markets. Mr. Prasad has received several awards for his efforts, the most notable of which is the 'India Business Leader of the Year' by CNBC Asia in 2015.

Mr. Erez Israeli - Chief Operating Officer and Global Head Generics & PSAI Business

Mr. Israeli is among the newest members to join the management team at Dr. Reddy's Laboratories. He joined the company in April 2018 from the Israel based chemicals company Enzymotec, where he served as the President and the Chief Executive Officer. He has more than 25 years of experience, and over his impressive tenure, he has held several key leadership positions. It is worth remarking that before joining Enzymotec, Erez worked with Teva Pharmaceuticals Limited for 23 years during which time, he held several roles like Head of Global Quality, Vice President Asia Operations, President Teva API, President & CEO of Growth Markets, et cetera.

Dr. Reddy's Laboratories Stock Trends in 2018:

On January 2, 2018, the opening price of Dr. Reddy's Lab shares was Rs.2,427 on the National Stock Exchange. The cost of the BSE SENSEX listed stock moved on to rise over the course of the month to enter the Rs.2,530 territory. However, after that, Dr. Reddy Labs shares moved on to shed roughly 15% and went down to be traded in the levels around Rs.2,100.

On February 2, the opening price of the scrip was Rs.2,150 on NSE. The month of February wasn't a tumultuous one for the investors, but it did show signs that the markets may be in for a bear run. The closing price of the stock at the end of the month was Rs.2,237.25.

The Dr. Reddy's Labs stock price gradually went down over the course of March. The NIFTY 50 stock, which started the month trading at levels around Rs.2,200, moved on to end the month at Rs.2,080. Things didn't change a lot in April either. The stocks maintained their bearings at levels below Rs.2,150.

It wasn't until May that things took a turn, but it didn't bring any reprieve to the investors. In fact, the stock price of Dr. Reddy's continued to go down, and for the second half of the month, the shares changed hands at levels below Rs.2,000. The closing price on May 31, 2018, was Rs.1,936.60. However, the first week of June brought some joy to the investors as the stocks started an upward run. The script managed to enter the Rs.2,100 territory again and lifted the Nifty Pharma index.

Market Capitalisation:

The market cap of Dr. Reddy's Lab, as of June 12, 2018, was a little over Rs.36,300 crore.

Company's Wealth and Recent Performance:

For the March quarter of the financial year 2017-18, the company's revenue was reported to be at Rs.3,535 crore. In comparison to the last quarter, this figure was down by 7%. Consolidated net profit for the March quarter stated to be at Rs.302.5 crore, in contrast to Rs.312.5 crore in the corresponding quarter of the previous fiscal year.

For the year ended on March 31, 2018, the consolidated revenue posted by the company reported its consolidated income to be at Rs.14,202.8 crore. It resulted in a 1% increase over the previous financial year. The profit after tax for the year was disclosed to be at Rs.981 crore, in contrast to Rs.1,203.9 crore in the prior year. Its research and development allocation for the period decreased by 7% over the FY17 to Rs.1,826 crore.

The performance of Dr. Reddy's Labs in the international markets took a hit in the March quarter. Its global generics revenues for the quarter decreased in North America, Europe, and the emerging markets. However, when we look at these regions over the entire year, Europe and emerging markets registered a growth of 8% while North America reported a decline of 6%.

Why Invest in Dr. Reddy's Laboratories?

From the last two years, the shares of Dr. Reddy's Lab have been on a downward path. In January 2016, the shares were trading at levels around Rs.3,000, but by June 2018, the stocks were observed trading at levels around Rs.1,990. This translates into a 30% drop in the stock price.

At the same time, NIFTY Pharma - the country's benchmark stock market index for the pharmaceutical sector, has also been on a downward trajectory. The index has shed more than 2,000 points in the last two years. The pharmaceutical industry has been struggling, primarily owing to processes and quality standards employed by the companies. The US FDA's concerns with these companies is another factor be considered here.

Fundamentally speaking, the company is built on firm foundations and has sound management. However, with the ongoing issues in the pharma sector, it may not be a feasible idea to invest in Dr. Reddy's shares. Alternately, you can look into mutual funds with holdings in the company. Before investing, it is strongly suggested that you do your research.

Stocks or Mutual Funds: Here is our recommendation

A lot of research and knowledge is required in stock market investments, and generally, they don't offer any tax benefits. Hence at mymoneykarma, we merely motivate our readers to invest in mutual funds. Investing in mutual funds doesn't require a lot of knowledge, and equity-linked mutual fund schemes also provide tax benefits. In addition to it, since mutual funds contain stocks from multiple companies, they help in building a diversified portfolio.

Note: The contents of this post/blog do not constitute any professional advice on a specific financial matter.

Indexes and Exchages

Bombay Stock Exchange (BSE)

The Bombay Stock Exchange, popularly called BSE, is Asia's first and oldest stock exchange. Located at Dalal Street in Mumbai, the BSE was formally established in 1875 by an influential stockbroker and businessman called Premchand Roychand. In the initial days, the BSE had its meetings under several Banyan trees in Mumbai before finding a permanent place, which is very appropriately named Dalal Street or Broker Street. After functioning as a floor trading exchange for more than a century, BSE ascended the digital ladder in 1995 by implementing a new screen-based automated trading platform with a capacity of 8 million orders in a day. In 2012, the BSE went global by becoming a Partner Exchange of the United Nations Sustainable Stock Exchange. Subsequently, BSE established India's first international exchange, called INX, in 2016.

National Stock Exchange (NSE)

NSE was set up in 1992 by a group of leading Indian financial institutions, following the Indian Government's directives. It aimed to bring transparency to the Indian capital market. It was India's first demutualized electronic exchange which operated on a completely automated screen-based electronic trading system, offering an easy trading facility to all Indian investors. NSE began its operations in the Wholesale Debt Market segment in 1994. NSE was the first company in India to offer a digital platform that connected the investor base of the entire country. NSE offers services in various segments, such as trading, equity derivatives, clearing and settlement services in equity, debt and currency derivatives, etc.

NIFTY Index

The NIFTY is NSE's flagship index that tracks the behavior of a portfolio of blue-chip companies that have the largest and most liquid Indian securities. It is owned as well as managed by IISL (India Index Services and Products Ltd), which is India's first specialized company to focus on an index as a core product. Nifty indexes 50 of the 1600 companies on the National Stock Exchange (NSE) and is thus popularly referred to as 'Nifty 50'. It captures approximately 65% of its float-adjusted market capitalization and is a true reflection of the Indian stock market. The Nifty 50 includes the major sectors of the Indian economy. It offers the exposure to the Indian market in one efficient portfolio. The Nifty index has been trading since April 1996. It is ideally suited for index funds, benchmarking and index-based derivatives.

SENSEX Index

Sensex is BSE's stock market index. It consists of 30 well-established and financially flourishing companies listed on BSE. It was established in 1986. These 30 component companies are known for being the largest and most actively traded stocks. They represent various industrial sectors of the Indian economy. Sensex is also known as BSE 30 and S&P BSE SENSEX. The word 'Sensex' is a portmanteau of the words 'Sensitive' and 'Index.' SENSEX is widely reported in domestic and international markets through print and electronic media. The indexing system is scientifically designed, based on globally accepted construction and review methodology. Since September 2003, S&P BSE Sensex is being determined on a free-float market capitalization methodology.