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Looking at Dr. Reddy's Laboratories Limited's (NSE:DRREDDY) earnings update on 31 March 2019, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 14% next year against the past 5-year average growth rate of -13%. Currently with trailing-twelve-month earnings of ₹19b, we can expect this to reach ₹21b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
View our latest analysis for Dr. Reddy's Laboratories
What can we expect from Dr. Reddy's Laboratories in the longer term?
The longer term expectations from the 34 analysts of DRREDDY is tilted towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for DRREDDY, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 13% based on the most recent earnings level of ₹19b to the final forecast of ₹28b by 2022. This leads to an EPS of ₹166.92 in the final year of projections relative to the current EPS of ₹113.28. Margins are currently sitting at 12%, which is expected to expand to 13% by 2022.
Next Steps:
Future outlook is only one aspect when you're building an investment case for a stock. For Dr. Reddy's Laboratories, I've compiled three relevant factors you should look at:
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Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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Valuation: What is Dr. Reddy's Laboratories worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Dr. Reddy's Laboratories is currently mispriced by the market.
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Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Dr. Reddy's Laboratories? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.