DR. REDDY'S LABORATORIES-ADR (RDY) Stock Fundamental Analysis
NYSE:RDY - New York Stock Exchange, Inc. - US2561352038 - ADR - Currency: USD
RDY gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 193 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 has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
RDY had positive earnings in the past year.
RDY had a positive operating cash flow in the past year.
In the past 5 years RDY has always been profitable.
Each year in the past 5 years RDY had a positive operating cash flow.
1.2 Ratios
RDY's Return On Assets of 11.43% is amongst the best of the industry. RDY outperforms 93.26% of its industry peers.
The Return On Equity of RDY (16.84%) is better than 90.67% of its industry peers.
RDY's Return On Invested Capital of 14.50% is amongst the best of the industry. RDY outperforms 92.75% of its industry peers.
The Average Return On Invested Capital over the past 3 years for RDY 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
RDY has a better Profit Margin (17.30%) than 91.19% of its industry peers.
In the last couple of years the Profit Margin of RDY has grown nicely.
RDY has a Operating Margin of 21.27%. This is amongst the best in the industry. RDY outperforms 87.05% of its industry peers.
In the last couple of years the Operating Margin of RDY has grown nicely.
RDY has a Gross Margin of 69.43%. This is in the better half of the industry: RDY outperforms 77.20% of its industry peers.
In the last couple of years the Gross Margin of RDY has remained more or less at the same level.
| 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), RDY 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.
Compared to 1 year ago, RDY has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 6.34 indicates that RDY is not in any danger for bankruptcy at the moment.
The Altman-Z score of RDY (6.34) is better than 81.87% of its industry peers.
The Debt to FCF ratio of RDY is 3.89, which is a good value as it means it would take RDY, 3.89 years of fcf income to pay off all of its debts.
RDY's Debt to FCF ratio of 3.89 is amongst the best of the industry. RDY outperforms 87.56% of its industry peers.
RDY has a Debt/Equity ratio of 0.02. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.02, RDY is in line with its industry, outperforming 55.44% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.02 | ||
| Debt/FCF | 3.89 | ||
| Altman-Z | 6.34 |
ROIC/WACC1.41
WACC10.27%
2.3 Liquidity
RDY has a Current Ratio of 1.92. This is a normal value and indicates that RDY is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.92, RDY is not doing good in the industry: 62.18% of the companies in the same industry are doing better.
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.
With a Quick ratio value of 1.37, RDY is not doing good in the industry: 65.80% of the companies in the same industry are doing better.
The current and quick ratio evaluation for RDY is rather negative, while it does have 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%.
RDY shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 23.62% yearly.
RDY shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 16.54%.
RDY shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 13.26% yearly.
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
RDY is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -2.07% yearly.
Based on estimates for the next years, RDY will show a small growth in Revenue. The Revenue will grow by 5.52% on average per year.
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
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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
RDY is valuated rather expensively with a Price/Earnings ratio of 18.33.
Based on the Price/Earnings ratio, RDY is valued cheaply inside the industry as 83.42% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of RDY to the average of the S&P500 Index (27.50), we can say RDY is valued slightly cheaper.
RDY is valuated rather expensively with a Price/Forward Earnings ratio of 17.15.
RDY's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. RDY is cheaper than 76.68% of the companies in the same industry.
RDY is valuated cheaply when we compare the Price/Forward Earnings ratio to 36.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.33 | ||
| Fwd PE | 17.15 |
4.2 Price Multiples
RDY's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. RDY is cheaper than 85.49% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of RDY indicates a somewhat cheap valuation: RDY is cheaper than 77.72% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 86.22 | ||
| EV/EBITDA | 11.47 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates RDY does not grow enough to justify the current Price/Earnings ratio.
RDY has an outstanding profitability rating, which may justify a higher PE ratio.
A cheap valuation may be justified as RDY's earnings are expected to decrease with -2.07% in the coming years.
PEG (NY)2.48
PEG (5Y)0.78
EPS Next 2Y-7.21%
EPS Next 3Y-2.07%
5. Dividend
5.1 Amount
RDY has a yearly dividend return of 0.64%, which is pretty low.
RDY's Dividend Yield is rather good when compared to the industry average which is at 3.97. RDY pays more dividend than 89.12% of the companies in the same industry.
With a Dividend Yield of 0.64, RDY pays less dividend than the S&P500 average, which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
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.
The Dividend Rate of RDY has been decling, while earnings will also be declining. This means the current dividend is most likely not sustainable.
DP11.79%
EPS Next 2Y-7.21%
EPS Next 3Y-2.07%
14.48
-0.21 (-1.43%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners48.44%
Inst Owner Change0%
Ins Owners22.54%
Ins Owner ChangeN/A
Market Cap12.05B
Analysts67.5
Price Target15.07 (4.07%)
Short Float %1.86%
Short Ratio6.8
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
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)-2.05%
PT rev (3m)-3.97%
EPS NQ rev (1m)-0.01%
EPS NQ rev (3m)8.63%
EPS NY rev (1m)-0.01%
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 | 18.33 | ||
| Fwd PE | 17.15 | ||
| P/S | 3.18 | ||
| P/FCF | 86.22 | ||
| P/OCF | 22.34 | ||
| P/B | 3.09 | ||
| P/tB | 4.6 | ||
| EV/EBITDA | 11.47 |
EPS(TTM)0.79
EY5.46%
EPS(NY)0.84
Fwd EY5.83%
FCF(TTM)0.17
FCFY1.16%
OCF(TTM)0.65
OCFY4.48%
SpS4.56
BVpS4.68
TBVpS3.15
PEG (NY)2.48
PEG (5Y)0.78
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 | 6.34 |
F-Score3
WACC10.27%
ROIC/WACC1.41
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%