Dr Reddy's shares jump despite 36% Q2 profit fall: Buy, sell or hold? What Nomura, Citi and others say

Shares of Dr Reddy's Laboratories rose in morning trade on Monday as brokerages highlighted a sharp margin recovery and better-than-expected profitability in the September quarter. Nomura retained its 'Buy' rating but cut its target price, while Citi raised its target and Jefferies upgraded the stock to 'Hold' from 'Underperform'. Goldman Sachs maintained 'Sell', and Kotak Neo retained 'Reduce'. The stock was trading at Rs 1,274.70 on the NSE at 10:33 am, up 3.68%. The drugmaker reported a 36% year-on-year fall in consolidated net profit to Rs 925 crore for Q2FY27, while revenue declined 0.5% to Rs 8,670.8 crore, primarily due to lower lenalidomide sales in North America. Sequentially, net profit rose 109% and revenue increased 7.4%. EBITDA margin stood at 20.6%. Nomura retains 'Buy', cuts target to Rs 1,730 Nomura said EBITDA and profit after tax exceeded its estimates by 14% and 5%, respectively, while revenue marginally missed expectations. It attributed margin improvement to cost control and business mix. The brokerage cut its FY27, FY28 and FY29 earnings estimates by 29%, 12% and 7%, respectively, citing one-time charges, lower semaglutide sales and the discontinuation of Novartis brands in India. What other brokerages say Citi: Maintained 'Buy' and raised its target price to Rs 1,510 from Rs 1,450, citing broad-based margin strength, operating leverage and cost efficiencies. Jefferies: Upgraded the stock to 'Hold' from 'Underperform' and raised its target to Rs 1,320 from Rs 1,040. It expects semaglutide supplies to resume in November 2026 and US approval for biosimilar abatacept in December. HSBC: Retained 'Buy' with a target of Rs 1,375, identifying the semaglutide relaunch and abatacept approval as key catalysts. BofA Securities: Maintained 'Buy' with a target of Rs 1,480, citing stronger gross margins and the potential of abatacept. Kotak Neo: Retained 'Reduce' but raised its target to Rs 1,220 from Rs 1,125, flagging limited sustainable earnings drivers. Goldman Sachs: Maintained 'Sell' but raised its target to Rs 1,150 from Rs 1,100, citing uncertainty around the semaglutide opportunity in Canada.