ACCE price target published on 22 Oct 2026, 16:00 CEST.
Price used: ₹1230 at the close on 23 Oct 2026, 12:00 CEST.
Fair value: the average of the applicable valuation models (discounted cash flow, multiples, residual income, dividend discount, shareholder yield), each run on the latest financial statements and the market price shown. Opinion columns (fair value, target, rating) are shown apart from the data. Full methodology: acceinvestments.com/data/how-we-value-stocks
Conflicts of interest: The author holds no personal position in this security. General statement
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Data
ACCE score
38
out of 100
P/E
31.1x
forward 20.9x
1-year return
-3.9%
Dividend yield
0.65%
Dr. Reddy's Laboratories Limited in four questions
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Overview
ACCE thesis
Dr. Reddy's makes generic small-molecule drugs, biosimilars and branded formulations, with a large US generics franchise and a growing presence in emerging markets. Its edge rests on scale in complex generics and an established US regulatory and distribution footprint, which keeps it among the few Indian pharma names with a credible biosimilars pipeline. The stock is not cheap on trailing numbers: a 31.2 trailing P/E against a 21.1 forward P/E implies the market expects earnings to recover sharply. Revenue shrank 5.6% and operating margin is only 4.3% against a 50.2% gross margin, so the thesis depends on pricing pressure in US generics easing and cost lines normalising. Those are the two things a deeper look needs to test before any view on the name is formed.
⚠ Investor warnings · 3 flagsAI-assisted·How I use AI
high
Earnings down sharply
Earnings fell 68.7% year on year and the latest quarter missed EPS estimates by 41.6%, while revenue shrank 5.6%.
moderate
Negative free cash flow
Free cash flow is reported at $-3.91 billion, a large negative figure that needs explaining against the company's otherwise low 0.19 debt-to-equity.
moderate
Rich valuation after earnings drop
Trailing P/E of 31.2 and EV/EBITDA of 18.8 look full for a company with falling revenue and a sharp earnings decline, though the 21.0 forward P/E suggests the market expects a recovery.
AI research notes
AI-assisted·How I use AIWritten Oct 22, 2026 · figures from 2026-10-22 · prices to Oct 23, 2026
Why it could do well
Analysts' mean price target sits at INR 1283.65, about 3.6% above the current share price.
Over five years revenue has grown about 10.8% a year on average, a longer record than the latest annual dip.
Forward P/E of 21.0x is well below the trailing 31.2x, suggesting earnings are expected to recover.
Why it could disappoint
Free cash flow over the last twelve months was negative at -INR 3.9B, so the business consumed cash.
Revenue fell 5.6% year over year, and the latest quarterly EPS came in 41.6% below expectations.
Return on equity of 8.8% is modest for the price investors are currently paying, given a trailing P/E of 31.2x.
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