DR. REDDY'S LABORATORIES-ADR (RDY) Stock Fundamental Analysis
NYSE:RDY - New York Stock Exchange, Inc. - US2561352038 - ADR - Currency: USD
Taking everything into account, RDY scores 6 out of 10 in our fundamental rating. RDY was compared to 195 industry peers in the Pharmaceuticals industry. Both the health and profitability get an excellent rating, making RDY a very profitable company, without any liquidiy or solvency issues. RDY is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year RDY was profitable.
In the past year RDY had a positive cash flow from operations.
RDY had positive earnings in each of the past 5 years.
In the past 5 years RDY always reported a positive cash flow from operatings.
1.2 Ratios
RDY has a Return On Assets of 11.43%. This is amongst the best in the industry. RDY outperforms 93.33% of its industry peers.
RDY has a Return On Equity of 16.84%. This is amongst the best in the industry. RDY outperforms 90.77% of its industry peers.
RDY has a Return On Invested Capital of 14.50%. This is amongst the best in the industry. RDY outperforms 92.82% of its industry peers.
RDY had an Average Return On Invested Capital over the past 3 years of 15.72%. This is in line with the industry average of 14.87%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.43% | ||
| ROE | 16.84% | ||
| ROIC | 14.5% |
ROA(3y)13.3%
ROA(5y)10.91%
ROE(3y)18.72%
ROE(5y)15.72%
ROIC(3y)15.72%
ROIC(5y)14.23%
1.3 Margins
Looking at the Profit Margin, with a value of 17.30%, RDY belongs to the top of the industry, outperforming 91.28% of the companies in the same industry.
RDY's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 21.27%, RDY belongs to the top of the industry, outperforming 87.18% of the companies in the same industry.
In the last couple of years the Operating Margin of RDY has grown nicely.
Looking at the Gross Margin, with a value of 69.43%, RDY is in the better half of the industry, outperforming 77.44% of the companies in the same industry.
RDY's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.27% | ||
| PM (TTM) | 17.3% | ||
| GM | 69.43% |
OM growth 3Y9.42%
OM growth 5Y4.7%
PM growth 3Y20.08%
PM growth 5Y8.68%
GM growth 3Y3.36%
GM growth 5Y1.12%
2. Health
2.1 Basic Checks
RDY has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, RDY has about the same amount of shares outstanding.
The number of shares outstanding for RDY has been increased compared to 5 years ago.
The debt/assets ratio for RDY is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 6.41 indicates that RDY is not in any danger for bankruptcy at the moment.
RDY's Altman-Z score of 6.41 is amongst the best of the industry. RDY outperforms 82.05% of its industry peers.
RDY has a debt to FCF ratio of 3.89. This is a good value and a sign of high solvency as RDY would need 3.89 years to pay back of all of its debts.
RDY has a better Debt to FCF ratio (3.89) than 87.69% of its industry peers.
A Debt/Equity ratio of 0.02 indicates that RDY is not too dependend on debt financing.
RDY's Debt to Equity ratio of 0.02 is in line compared to the rest of the industry. RDY outperforms 55.38% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.02 | ||
| Debt/FCF | 3.89 | ||
| Altman-Z | 6.41 |
ROIC/WACC1.4
WACC10.34%
2.3 Liquidity
A Current Ratio of 1.92 indicates that RDY should not have too much problems paying its short term obligations.
The Current ratio of RDY (1.92) is worse than 62.05% of its industry peers.
RDY has a Quick Ratio of 1.37. This is a normal value and indicates that RDY is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of RDY (1.37) is worse than 65.64% of its industry peers.
RDY does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.92 | ||
| Quick Ratio | 1.37 |
3. Growth
3.1 Past
RDY shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 1.35%.
The Earnings Per Share has been growing by 23.62% on average over the past years. This is a very strong growth
The Revenue has grown by 16.54% in the past year. This is quite good.
Measured over the past years, RDY shows a quite strong growth in Revenue. The Revenue has been growing by 13.26% on average per year.
EPS 1Y (TTM)1.35%
EPS 3Y33.55%
EPS 5Y23.62%
EPS Q2Q%21.89%
Revenue 1Y (TTM)16.54%
Revenue growth 3Y14.86%
Revenue growth 5Y13.26%
Sales Q2Q%19.89%
3.2 Future
The Earnings Per Share is expected to decrease by -2.07% on average over the next years.
The Revenue is expected to grow by 5.52% on average over the next years.
EPS Next Y7.4%
EPS Next 2Y-7.21%
EPS Next 3Y-2.07%
EPS Next 5YN/A
Revenue Next Year9.19%
Revenue Next 2Y3.97%
Revenue Next 3Y5.72%
Revenue Next 5Y5.52%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 19.09, the valuation of RDY can be described as rather expensive.
Based on the Price/Earnings ratio, RDY is valued cheaper than 83.59% of the companies in the same industry.
When comparing the Price/Earnings ratio of RDY to the average of the S&P500 Index (27.45), we can say RDY is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 17.72, the valuation of RDY can be described as rather expensive.
75.90% of the companies in the same industry are more expensive than RDY, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 21.90. RDY is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.09 | ||
| Fwd PE | 17.72 |
4.2 Price Multiples
RDY's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. RDY is cheaper than 85.13% of the companies in the same industry.
77.95% of the companies in the same industry are more expensive than RDY, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 89.09 | ||
| EV/EBITDA | 11.69 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
RDY has an outstanding profitability rating, which may justify a higher PE ratio.
RDY's earnings are expected to decrease with -2.07% in the coming years. This may justify a cheaper valuation.
PEG (NY)2.58
PEG (5Y)0.81
EPS Next 2Y-7.21%
EPS Next 3Y-2.07%
5. Dividend
5.1 Amount
With a yearly dividend of 0.62%, RDY is not a good candidate for dividend investing.
RDY's Dividend Yield is rather good when compared to the industry average which is at 4.05. RDY pays more dividend than 89.23% of the companies in the same industry.
With a Dividend Yield of 0.62, RDY pays less dividend than the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.62% |
5.2 History
The dividend of RDY decreases each year by -19.44%.
RDY has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-19.44%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
RDY pays out 11.79% of its income as dividend. This is a sustainable payout ratio.
RDY's earnings and Dividend Rate are declining. This means the current dividend is most likely not sustainable.
DP11.79%
EPS Next 2Y-7.21%
EPS Next 3Y-2.07%
15.08
+0.2 (+1.34%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners48.44%
Inst Owner Change-58.37%
Ins Owners22.54%
Ins Owner ChangeN/A
Market Cap12.55B
Analysts67.5
Price Target15.07 (-0.07%)
Short Float %2.14%
Short Ratio7.14
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.62% |
Yearly Dividend0.09
Dividend Growth(5Y)-19.44%
DP11.79%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.24%
Min EPS beat(2)-3.24%
Max EPS beat(2)2.77%
EPS beat(4)2
Avg EPS beat(4)-1.72%
Min EPS beat(4)-13.1%
Max EPS beat(4)6.71%
EPS beat(8)6
Avg EPS beat(8)8.02%
EPS beat(12)10
Avg EPS beat(12)18.2%
EPS beat(16)11
Avg EPS beat(16)9.88%
Revenue beat(2)1
Avg Revenue beat(2)0.29%
Min Revenue beat(2)-0.42%
Max Revenue beat(2)1%
Revenue beat(4)3
Avg Revenue beat(4)1.75%
Min Revenue beat(4)-0.42%
Max Revenue beat(4)3.62%
Revenue beat(8)5
Avg Revenue beat(8)1.05%
Revenue beat(12)8
Avg Revenue beat(12)2.01%
Revenue beat(16)10
Avg Revenue beat(16)1.72%
PT rev (1m)-6.15%
PT rev (3m)-3.97%
EPS NQ rev (1m)-0.04%
EPS NQ rev (3m)8.63%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)0.66%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.59%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.42%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.09 | ||
| Fwd PE | 17.72 | ||
| P/S | 3.28 | ||
| P/FCF | 89.09 | ||
| P/OCF | 23.08 | ||
| P/B | 3.19 | ||
| P/tB | 4.75 | ||
| EV/EBITDA | 11.69 |
EPS(TTM)0.79
EY5.24%
EPS(NY)0.85
Fwd EY5.64%
FCF(TTM)0.17
FCFY1.12%
OCF(TTM)0.65
OCFY4.33%
SpS4.59
BVpS4.72
TBVpS3.17
PEG (NY)2.58
PEG (5Y)0.81
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.43% | ||
| ROE | 16.84% | ||
| ROCE | 19.08% | ||
| ROIC | 14.5% | ||
| ROICexc | 17.42% | ||
| ROICexgc | 27.35% | ||
| OM | 21.27% | ||
| PM (TTM) | 17.3% | ||
| GM | 69.43% | ||
| FCFM | 3.69% |
ROA(3y)13.3%
ROA(5y)10.91%
ROE(3y)18.72%
ROE(5y)15.72%
ROIC(3y)15.72%
ROIC(5y)14.23%
ROICexc(3y)19.52%
ROICexc(5y)17.55%
ROICexgc(3y)25.14%
ROICexgc(5y)22.46%
ROCE(3y)21.22%
ROCE(5y)19.86%
ROICexcg growth 3Y5.49%
ROICexcg growth 5Y1.95%
ROICexc growth 3Y-0.12%
ROICexc growth 5Y-0.54%
OM growth 3Y9.42%
OM growth 5Y4.7%
PM growth 3Y20.08%
PM growth 5Y8.68%
GM growth 3Y3.36%
GM growth 5Y1.12%
F-Score3
Asset Turnover0.66
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.02 | ||
| Debt/FCF | 3.89 | ||
| Debt/EBITDA | 0.09 | ||
| Cap/Depr | 201.9% | ||
| Cap/Sales | 10.54% | ||
| Interest Coverage | 19.93 | ||
| Cash Conversion | 53.7% | ||
| Profit Quality | 21.3% | ||
| Current Ratio | 1.92 | ||
| Quick Ratio | 1.37 | ||
| Altman-Z | 6.41 |
F-Score3
WACC10.34%
ROIC/WACC1.4
Cap/Depr(3y)179.81%
Cap/Depr(5y)161.03%
Cap/Sales(3y)9.33%
Cap/Sales(5y)8.68%
Profit Quality(3y)47.35%
Profit Quality(5y)60.43%
High Growth Momentum
Growth
EPS 1Y (TTM)1.35%
EPS 3Y33.55%
EPS 5Y23.62%
EPS Q2Q%21.89%
EPS Next Y7.4%
EPS Next 2Y-7.21%
EPS Next 3Y-2.07%
EPS Next 5YN/A
Revenue 1Y (TTM)16.54%
Revenue growth 3Y14.86%
Revenue growth 5Y13.26%
Sales Q2Q%19.89%
Revenue Next Year9.19%
Revenue Next 2Y3.97%
Revenue Next 3Y5.72%
Revenue Next 5Y5.52%
EBIT growth 1Y7.53%
EBIT growth 3Y25.68%
EBIT growth 5Y18.58%
EBIT Next Year27.07%
EBIT Next 3Y5.69%
EBIT Next 5Y20.64%
FCF growth 1Y-33.16%
FCF growth 3Y9.92%
FCF growth 5Y-12.7%
OCF growth 1Y2.19%
OCF growth 3Y18.21%
OCF growth 5Y9.24%