DR. REDDY'S LABORATORIES-ADR (RDY) Stock Fundamental Analysis
NYSE:RDY - New York Stock Exchange, Inc. - US2561352038 - ADR - Currency: USD
We assign a fundamental rating of 6 out of 10 to RDY. RDY was compared to 192 industry peers in the Pharmaceuticals industry. While RDY belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. RDY has a correct valuation and a medium 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.
RDY had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of RDY (11.43%) is better than 95.31% of its industry peers.
RDY's Return On Equity of 17.36% is amongst the best of the industry. RDY outperforms 92.19% of its industry peers.
The Return On Invested Capital of RDY (14.90%) is better than 92.19% of its industry peers.
The Average Return On Invested Capital over the past 3 years for RDY is significantly below the industry average of 44.16%.
The last Return On Invested Capital (14.90%) for RDY is above the 3 year average (14.78%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.43% | ||
| ROE | 17.36% | ||
| ROIC | 14.9% |
ROA(3y)11.88%
ROA(5y)10.34%
ROE(3y)16.82%
ROE(5y)14.9%
ROIC(3y)14.78%
ROIC(5y)13.87%
1.3 Margins
The Profit Margin of RDY (17.75%) is better than 90.10% of its industry peers.
In the last couple of years the Profit Margin of RDY has grown nicely.
With an excellent Operating Margin value of 22.04%, RDY belongs to the best of the industry, outperforming 88.02% of the companies in the same industry.
RDY's Operating Margin has improved in the last couple of years.
RDY has a Gross Margin of 70.69%. This is in the better half of the industry: RDY outperforms 77.08% 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 | 22.04% | ||
| PM (TTM) | 17.75% | ||
| GM | 70.69% |
OM growth 3Y9.78%
OM growth 5Y11.65%
PM growth 3Y24.79%
PM growth 5Y9.55%
GM growth 3Y1.28%
GM growth 5Y0.09%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so RDY is still creating some value.
The number of shares outstanding for RDY has been increased compared to 1 year ago.
The number of shares outstanding for RDY has been increased compared to 5 years ago.
RDY has a worse debt/assets ratio than last year.
2.2 Solvency
RDY has an Altman-Z score of 5.83. This indicates that RDY is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.83, RDY belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
RDY has a debt to FCF ratio of 5.77. This is a neutral value as RDY would need 5.77 years to pay back of all of its debts.
With an excellent Debt to FCF ratio value of 5.77, RDY belongs to the best of the industry, outperforming 84.38% of the companies in the same industry.
RDY has a Debt/Equity ratio of 0.02. This is a healthy value indicating a solid balance between debt and equity.
RDY has a Debt to Equity ratio of 0.02. This is comparable to the rest of the industry: RDY outperforms 55.21% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.02 | ||
| Debt/FCF | 5.77 | ||
| Altman-Z | 5.83 |
ROIC/WACC1.39
WACC10.69%
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.
The Current ratio of RDY (1.92) is comparable to the rest of the industry.
A Quick Ratio of 1.36 indicates that RDY should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.36, RDY is not doing good in the industry: 68.23% of the companies in the same industry are doing better.
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 | 1.36 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 2.56% over the past year.
The Earnings Per Share has been growing by 24.21% on average over the past years. This is a very strong growth
Looking at the last year, RDY shows a quite strong growth in Revenue. The Revenue has grown by 14.76% in the last year.
RDY shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 12.64% yearly.
EPS 1Y (TTM)2.56%
EPS 3Y42.67%
EPS 5Y24.21%
EPS Q2Q%2.28%
Revenue 1Y (TTM)14.76%
Revenue growth 3Y13.72%
Revenue growth 5Y12.64%
Sales Q2Q%15.81%
3.2 Future
The Earnings Per Share is expected to decrease by -4.45% on average over the next years.
Based on estimates for the next years, RDY will show a quite strong growth in Revenue. The Revenue will grow by 8.10% on average per year.
EPS Next Y1.28%
EPS Next 2Y3.83%
EPS Next 3Y-4.45%
EPS Next 5YN/A
Revenue Next Year16.09%
Revenue Next 2Y12.59%
Revenue Next 3Y7.86%
Revenue Next 5Y8.1%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
RDY is valuated rather expensively with a Price/Earnings ratio of 17.46.
Based on the Price/Earnings ratio, RDY is valued cheaply inside the industry as 85.42% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of RDY to the average of the S&P500 Index (29.71), we can say RDY is valued slightly cheaper.
A Price/Forward Earnings ratio of 15.59 indicates a correct valuation of RDY.
83.85% of the companies in the same industry are more expensive than RDY, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of RDY to the average of the S&P500 Index (22.34), we can say RDY is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.46 | ||
| Fwd PE | 15.59 |
4.2 Price Multiples
85.42% of the companies in the same industry are more expensive than RDY, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of RDY indicates a somewhat cheap valuation: RDY is cheaper than 78.65% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 111.53 | ||
| EV/EBITDA | 10.52 |
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 -4.45% in the coming years.
PEG (NY)13.65
PEG (5Y)0.72
EPS Next 2Y3.83%
EPS Next 3Y-4.45%
5. Dividend
5.1 Amount
RDY has a yearly dividend return of 0.71%, which is pretty low.
Compared to an average industry Dividend Yield of 4.38, RDY pays a better dividend. On top of this RDY pays more dividend than 90.10% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.30, RDY's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.71% |
5.2 History
The dividend of RDY decreases each year by -19.81%.
RDY has been paying a dividend for at least 10 years, so it has a reliable track record.
RDY has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-19.81%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
12.48% of the earnings are spent on dividend by RDY. This is a low number and sustainable payout ratio.
RDY's earnings and Dividend Rate are declining. This means the current dividend is most likely not sustainable.
DP12.48%
EPS Next 2Y3.83%
EPS Next 3Y-4.45%
12.92
+0.11 (+0.86%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners49.75%
Inst Owner Change401.79%
Ins Owners21.84%
Ins Owner ChangeN/A
Market Cap10.76B
Analysts57.14
Price Target15.63 (20.98%)
Short Float %3.15%
Short Ratio9.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.71% |
Yearly Dividend0.09
Dividend Growth(5Y)-19.81%
DP12.48%
Div Incr Years4
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-3.2%
Min EPS beat(2)-13.1%
Max EPS beat(2)6.71%
EPS beat(4)3
Avg EPS beat(4)2.06%
Min EPS beat(4)-13.1%
Max EPS beat(4)9.8%
EPS beat(8)7
Avg EPS beat(8)11.96%
EPS beat(12)9
Avg EPS beat(12)10.66%
EPS beat(16)10
Avg EPS beat(16)2.82%
Revenue beat(2)2
Avg Revenue beat(2)3.2%
Min Revenue beat(2)2.79%
Max Revenue beat(2)3.62%
Revenue beat(4)3
Avg Revenue beat(4)1.71%
Min Revenue beat(4)-1.99%
Max Revenue beat(4)3.62%
Revenue beat(8)6
Avg Revenue beat(8)2.46%
Revenue beat(12)8
Avg Revenue beat(12)2%
Revenue beat(16)9
Avg Revenue beat(16)1.21%
PT rev (1m)0%
PT rev (3m)-3.43%
EPS NQ rev (1m)0.18%
EPS NQ rev (3m)-80.84%
EPS NY rev (1m)-0.42%
EPS NY rev (3m)-80.63%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.79%
Revenue NY rev (1m)0.67%
Revenue NY rev (3m)3.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.46 | ||
| Fwd PE | 15.59 | ||
| P/S | 3.12 | ||
| P/FCF | 111.53 | ||
| P/OCF | 27.53 | ||
| P/B | 3.05 | ||
| P/tB | 4.64 | ||
| EV/EBITDA | 10.52 |
EPS(TTM)0.74
EY5.73%
EPS(NY)0.83
Fwd EY6.42%
FCF(TTM)0.12
FCFY0.9%
OCF(TTM)0.47
OCFY3.63%
SpS4.14
BVpS4.24
TBVpS2.79
PEG (NY)13.65
PEG (5Y)0.72
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.43% | ||
| ROE | 17.36% | ||
| ROCE | 19.61% | ||
| ROIC | 14.9% | ||
| ROICexc | 18.55% | ||
| ROICexgc | 30.29% | ||
| OM | 22.04% | ||
| PM (TTM) | 17.75% | ||
| GM | 70.69% | ||
| FCFM | 2.8% |
ROA(3y)11.88%
ROA(5y)10.34%
ROE(3y)16.82%
ROE(5y)14.9%
ROIC(3y)14.78%
ROIC(5y)13.87%
ROICexc(3y)19.53%
ROICexc(5y)17.63%
ROICexgc(3y)24.1%
ROICexgc(5y)22.07%
ROCE(3y)20.69%
ROCE(5y)19.74%
ROICexcg growth 3Y12.52%
ROICexcg growth 5Y12.86%
ROICexc growth 3Y14.7%
ROICexc growth 5Y16.53%
OM growth 3Y9.78%
OM growth 5Y11.65%
PM growth 3Y24.79%
PM growth 5Y9.55%
GM growth 3Y1.28%
GM growth 5Y0.09%
F-Score3
Asset Turnover0.64
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.02 | ||
| Debt/FCF | 5.77 | ||
| Debt/EBITDA | 0.09 | ||
| Cap/Depr | 168.94% | ||
| Cap/Sales | 8.53% | ||
| Interest Coverage | 22.89 | ||
| Cash Conversion | 41.81% | ||
| Profit Quality | 15.75% | ||
| Current Ratio | 1.92 | ||
| Quick Ratio | 1.36 | ||
| Altman-Z | 5.83 |
F-Score3
WACC10.69%
ROIC/WACC1.39
Cap/Depr(3y)167.01%
Cap/Depr(5y)131.16%
Cap/Sales(3y)8.76%
Cap/Sales(5y)7.27%
Profit Quality(3y)54.18%
Profit Quality(5y)79.65%
High Growth Momentum
Growth
EPS 1Y (TTM)2.56%
EPS 3Y42.67%
EPS 5Y24.21%
EPS Q2Q%2.28%
EPS Next Y1.28%
EPS Next 2Y3.83%
EPS Next 3Y-4.45%
EPS Next 5YN/A
Revenue 1Y (TTM)14.76%
Revenue growth 3Y13.72%
Revenue growth 5Y12.64%
Sales Q2Q%15.81%
Revenue Next Year16.09%
Revenue Next 2Y12.59%
Revenue Next 3Y7.86%
Revenue Next 5Y8.1%
EBIT growth 1Y6.1%
EBIT growth 3Y24.84%
EBIT growth 5Y25.76%
EBIT Next Year34.37%
EBIT Next 3Y6.72%
EBIT Next 5Y10.71%
FCF growth 1Y-61.54%
FCF growth 3Y-8.04%
FCF growth 5Y-2.41%
OCF growth 1Y-19.62%
OCF growth 3Y8.36%
OCF growth 5Y9.62%