Views on Dr Reddys gets Warning Letter from USFDA: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research - Pharma, Angel Broking) on:

Dr Reddy's gets Warning Letter from USFDA:

"Dr Reddy's has received a warning letter issued by the USFDA, relating to its three plants Srikakulam, and Miryalaguda, Telegana along with the oncology formulation business at Duvvada. Dr Reddys has mentioned that it will respond to the letter in 15 days. The company has said that Srikakulam facilities itself contribute around 10-12% of sales of the company. However, according to the company's SEC filling the company had set up a new manufacturing facility in a Special Economic Zone in Duvvada, Visakhapatnam, Andhra Pradesh, India for manufacturing of parenteral (injectable form) products, so we think the contribution of the plant, should not be significant. Further the impact of the API facilities would be depend upon how quick the company fixes the USFDA issues plant transfers or does third party sources. Nonetheless, the near term performance of the company will be impacted. The stock has corrected around 10-12% on back of the news, which we believe should discount most of the negatives in the stock. We remain NEUTRAL on the stock."

Shares of DR.REDDY'S LABORATORIES LTD. was last trading in BSE at Rs.3629.55 as compared to the previous close of Rs. 4252.6. The total number of shares traded during the day was 379150 in over 47720 trades.

The stock hit an intraday high of Rs. 4294.15 and intraday low of 3615. The net turnover during the day was Rs. 1421530300.

Source : Equity Bulls

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