JPM on DR Reddys ; Upgrade to Neutral, TP Rs 1270

Closing UW after almost four years as stock has underperformed (-3% YTD vs. Nifty Pharma Index +11%) & risk reward now looks more balanced. 2Q was a revenue miss, but adj core margins at 19.5% beat JPMe by 160bps, driven by below-normal R&D (100–200bps lower), contained SG&A and low-margin PSAI down 12% YoY, so durability remains to be seen Remain conservative on semaglutide ramp, & abatacept approval & execution remains uncertain (abatacept accounts for 11%/15% of FY28/FY29 earnings) With valuations full at 24x/19x FY28/FY29E PER, +13%/in line compared to Cipla & 20%/10% premium to Lupin, remain on sidelines.

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