A strong performer from today's afternoon trading session is Dr. Reddy's Laboratories, whose shares rose 4.0% to $15.13 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
Dr. Reddy's Laboratories Has Attractive Multiples and Trades Below Its Graham Number:
Dr. Reddy's Laboratories Limited, together with its subsidiaries, operates as an integrated pharmaceutical company worldwide. The company belongs to the Health Care sector, which has an average price to earnings (P/E) ratio of 26.07 and an average price to book (P/B) ratio of 3.53. In contrast, Dr. Reddy's Laboratories has a trailing 12 month P/E ratio of 19.4 and a P/B ratio of 0.04.
Dr. Reddy's Laboratories has moved 8.9% over the last year compared to 23.7% for the S&P 500 — a difference of -14.8%. Dr. Reddy's Laboratories has a 52 week high of $16.89 and a 52 week low of $13.31.
An Excellent Current Ratio but Similar Gross Margins to the Industry Average of 57.86%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $2,225 | $2,316 | $2,594 | $2,826 | $2,992 | $3,350 |
| Gross Margins | 54% | 54% | 54% | 53% | 56% | 59% |
| Net Margins | 12% | 11% | 9% | 11% | 18% | 20% |
| Net Income (M) | $272 | $259 | $236 | $311 | $548 | $668 |
| Net Interest Expense (M) | $889 | $983 | $970 | $958 | $1,428 | $1,711 |
| Depreciation & Amort. (M) | $176 | $165 | $175 | $156 | $154 | $178 |
| Diluted Shares (M) | 166 | 166 | 166 | 166 | 167 | 167 |
| Earnings Per Share | $1.64 | $1.56 | $1.52 | $1.87 | $3.3 | $4.01 |
| Free Cash Flow (M) | $314 | $379 | $355 | $177 | $578 | $545 |
| CAPEX (M) | $101 | $17 | $133 | $193 | $138 | n/a |
| Total Debt (M) | $318 | $17 | $86 | $76 | $16 | $72 |
| Net Debt / EBITDA | 0.6 | -0.03 | -0.23 | -0.22 | -0.06 | -0.01 |
| Current Ratio | 1.92 | 1.79 | 1.78 | 1.93 | 2.41 | 2.58 |
Dr. Reddy's Laboratories has an excellent current ratio of 2.58, positive cash flows, and healthy leverage levels. Furthermore, Dr. Reddy's Laboratories has similar gross margins to its peers.
