Kotak Inst Eqt on DR Reddys ; Reduce, TP Rs 1220

After two successive quarters of tepid margins, DRRD delivered a strong comeback with an adjusted EBITDA margin of 19.1% (440 bps above KIE; +550 bps qoq) in 2QFY27, aided by new launches, a favorable business mix, the much-awaited cost efficiencies and forex tailwinds. Importantly, DRRD stays confident of restoring Semaglutide supplies by Nov-2026 and is guiding for ~20%+ IFRS EBITDA margins in 2HFY27E. While 2HFY27 outlook is healthy, led by the likely resumption of Semaglutide supplies & expected Abatacept IV approval in the US, co lacks any further material triggers, with full valuations leaving no scope for any slip-ups

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