|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Dr. Reddy’s Laboratories: Should Continue to Gain Market Share in Lucrative Markets
Posted by: Roger Conrad (IP Logged)
Date: May 25, 2012 10:14AM
Dr. Reddy’s Laboratories (RDY), India’s second-largest pharmaceutical company, recently reported a fourth-quarter and full-year 2012 performance that beat expectations on revenues but missed estimates on earnings.
Revenues for the full year came in at $1.9 billion, a strong growth of 20 percent over the previous year. Revenues for the quarter, ending March 21, reached $522 million, an increase of 32 percent year over year. The company disappointed investors with a meager 2.7 percent rise in fourth-quarter earnings, but mostly because of a one-time charge.
Revenues from the company’s Global Generics segment came in at $361 million for the quarter, an increase of 30 percent year over year, largely driven by demand in the U.S. and Russia.
Gross margins declined, as some drugs experienced price erosion. The company reduced its net debt by USD154 million to USD276 million.
Dr. Reddy’s management said that it expected about USD2.5 billion in sales this year, noting a favorable outcome of the U.S. Food and Drug Administration’s inspection of its new facility in the growing market of Mexico.
Dr. Reddy’s primary business lines are in the U.S., Europe, Russia and India, with 60 percent of the firm’s sales derived from outside of its home market. The Hyderabad-based company boasts a strong research and development unit focused on the treatment of cancer, diabetes, cardiovascular diseases, inflammation and bacterial infections.
The company has been a big beneficiary of the rise of the Indian generic pharmaceutical industry. Because of the affordability of their products and the technological prowess with which they’re produced, Indian pharmaceutical firms should continue to gain market share in developed markets, especially the U.S. generic drugs’ share of the U.S. pharmaceutical market is around 19 percent and growing with each passing year.
Indian companies earn roughly 29 percent of their revenue from the U.S., which means America will continue to be an important market for the subcontinent’s firms. Indian companies will expand their margins as they further establish themselves in the U.S.
Dr. Reddy’s stock has produced substantial gains over the past six years, but there’s more upside to come. Although there may be periodic pauses in the stock’s ascent, Dr. Reddy’s remains a top Indian stock market pick of mine.
Stocks Discussed: RDY,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.