DR. REDDY'S LABORATORIES-ADR (RDY) Stock Fundamental Analysis
NYSE:RDY - New York Stock Exchange, Inc. - US2561352038 - ADR - Currency: USD
Overall RDY gets a fundamental rating of 6 out of 10. We evaluated RDY against 195 industry peers in the Pharmaceuticals industry. RDY gets an excellent profitability rating and is at the same time showing great financial health properties. RDY has a correct valuation and a medium growth rate.
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.
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
The Return On Assets of RDY (11.43%) is better than 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.
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 91.28% of its industry peers.
RDY's Profit Margin has improved in the last couple of years.
RDY has a Operating Margin of 21.27%. This is amongst the best in the industry. RDY outperforms 87.18% of its industry peers.
In the last couple of years the Operating Margin of RDY has grown nicely.
RDY's Gross Margin of 69.43% is fine compared to the rest of the industry. RDY outperforms 77.44% of its industry peers.
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so RDY is still creating some value.
RDY has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, RDY has more shares outstanding
The debt/assets ratio for RDY is higher compared to a year ago.
2.2 Solvency
RDY has an Altman-Z score of 6.44. This indicates that RDY is financially healthy and has little risk of bankruptcy at the moment.
RDY has a better Altman-Z score (6.44) than 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.
With an excellent Debt to FCF ratio value of 3.89, RDY belongs to the best of the industry, outperforming 87.69% of the companies in the same industry.
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 | 6.44 |
ROIC/WACC1.4
WACC10.34%
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.
RDY has a Current ratio of 1.92. This is in the lower half of the industry: RDY underperforms 62.05% of its industry peers.
A Quick Ratio of 1.37 indicates that RDY should not have too much problems paying its short term obligations.
RDY's Quick ratio of 1.37 is on the low side compared to the rest of the industry. RDY is outperformed by 65.64% of its industry peers.
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%.
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.
RDY is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.52% yearly.
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.
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
Based on the Price/Earnings ratio of 19.09, the valuation of RDY can be described as rather expensive.
Compared to the rest of the industry, the Price/Earnings ratio of RDY indicates a rather cheap valuation: RDY is cheaper than 83.59% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.29, RDY is valued a bit cheaper.
RDY is valuated rather expensively with a Price/Forward Earnings ratio of 17.83.
Based on the Price/Forward Earnings ratio, RDY is valued a bit cheaper than 75.38% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.74, RDY is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.09 | ||
| Fwd PE | 17.83 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, RDY is valued cheaply inside the industry as 84.10% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, RDY is valued a bit cheaper than 77.95% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 89.63 | ||
| EV/EBITDA | 11.77 |
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)2.58
PEG (5Y)0.81
EPS Next 2Y-7.21%
EPS Next 3Y-2.07%
5. Dividend
5.1 Amount
RDY has a yearly dividend return of 0.62%, which is pretty low.
Compared to an average industry Dividend Yield of 4.05, RDY pays a better dividend. On top of this RDY pays more dividend than 89.23% of the companies listed in the same industry.
With a Dividend Yield of 0.62, RDY pays less dividend than the S&P500 average, which is at 2.37.
| 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.
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%
15.08
0 (0%)
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 Cap12.55B
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 | 17.83 | ||
| P/S | 3.3 | ||
| P/FCF | 89.63 | ||
| P/OCF | 23.22 | ||
| P/B | 3.21 | ||
| P/tB | 4.78 | ||
| EV/EBITDA | 11.77 |
EPS(TTM)0.79
EY5.24%
EPS(NY)0.85
Fwd EY5.61%
FCF(TTM)0.17
FCFY1.12%
OCF(TTM)0.65
OCFY4.31%
SpS4.57
BVpS4.69
TBVpS3.15
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 | 6.44 |
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%