DRREDDY.NS · NSI · Healthcare
Dr. Reddy's Laboratories Limited
Also onConsensus Drift
Implied value per share
INR 967.41
Market price
INR 1185.00
Implied upside
-18.4%
5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case
Value Per Share
Same forecast, different terminal treatment. Percentages vs price.
Forecast Cashflows
Reporting currency (INR). Outflows negative.
| Line | FY27 | FY28 | FY29 | FY30 | FY31 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | INR 372.8bn | INR 413.6bn | INR 459.0bn | INR 509.3bn | INR 565.1bn | +11.0% |
| EBIT | INR 78.7bn | INR 87.3bn | INR 96.9bn | INR 107.5bn | INR 119.3bn | +11.0% |
| NOPAT | INR 59.9bn | INR 66.4bn | INR 73.7bn | INR 81.8bn | INR 90.8bn | +11.0% |
| Add depreciation & amortisation | INR 20.3bn | INR 22.6bn | INR 25.0bn | INR 27.8bn | INR 30.8bn | +11.0% |
| Less capital expenditure | INR -36.8bn | INR -40.9bn | INR -45.3bn | INR -50.3bn | INR -55.8bn | +11.0% |
| Less increase in working capital | INR -23.8bn | INR -26.4bn | INR -29.3bn | INR -32.5bn | INR -36.1bn | +11.0% |
| Free cashflow to firm | INR 19.6bn | INR 21.7bn | INR 24.1bn | INR 26.7bn | INR 29.7bn | +11.0% |
| Discount factor | 0.9520 | 0.8629 | 0.7821 | 0.7088 | 0.6424 | - |
| Present value | INR 18.6bn | INR 18.7bn | INR 18.8bn | INR 19.0bn | INR 19.1bn | +0.6% |
| Present Value Of The Forecast | INR 94.2bn | |||||
Discount Rate
Source shown per component. All overridable above.
| Risk-free rate | 6.80% | INR assumption - no free live source available for this market (assumption) |
| Equity risk premium | 8.00% | Market assumption |
| Beta | 0.492 | Reported 0.242, pulled toward 1.0 (Blume) |
| Cost of equity | 10.74% | Risk-free + beta x equity risk premium |
| Cost of debt | 6.80% | Floored at the risk-free rate (implied cost of debt was lower) |
| Market capitalisation | INR 987.1bn | 92.7% of capital |
| Total debt | INR 77.3bn | 7.3% of capital, book value as a proxy |
| Tax rate | 23.9% | Effective, capped at statutory |
| WACC | 10.33% | E/V x Re + D/V x Rd x (1 - t) |
Terminal Value
Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.
Perpetuity growth at 2.50%
88% of EV
- Forecast FCFF, final year
- INR 29.7bn
- Capex at depreciation, working capital in reinvestment
- INR 99.3bn
- Less reinvestment at g/ROIC (16.0% of NOPAT)
- INR -15.9bn
- Capitalised
- INR 83.4bn
- ROIC (reported)
- 15.7%
- Terminal value, undiscounted
- INR 1091.9bn
- Terminal value, discounted
- INR 701.5bn
- Enterprise value
- INR 795.7bn
- Less net debt
- INR -10.5bn
- Equity value
- INR 806.2bn
Exit at 13.8x EBITDA
93% of EV
- Terminal value, undiscounted
- INR 2073.4bn
- Terminal value, discounted
- INR 1332.0bn
- Enterprise value
- INR 1426.2bn
- Less net debt
- INR -10.5bn
- Equity value
- INR 1436.7bn
Spread between methods: 56%.
Sensitivity
Value per share (INR) by discount rate and long-run growth.
| Long-run growth | |||||
|---|---|---|---|---|---|
| Discount rate | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
| 8.33% | 1247.38 | 1298.71 | 1358.38 | 1428.76 | 1513.14 |
| 9.33% | 1062.68 | 1095.89 | 1133.59 | 1176.84 | 1227.06 |
| 10.33% | 921.00 | 942.96 | 967.41 | 994.86 | 1025.98 |
| 11.33% | 809.16 | 823.83 | 839.89 | 857.59 | 877.26 |
| 12.33% | 718.84 | 728.62 | 739.17 | 750.60 | 763.08 |
Outlined: this model. Green text: above today's price of 1185.00. Shading: distance from this model's own value.
Priced In
What each input would have to be to justify the current price, one at a time.
| Input | Model | Implied | Gap |
|---|---|---|---|
| Revenue growth, every year | 11.0% | 17.5% | +6.5pp |
| EBIT margin | 21.1% | 25.2% | +4.1pp |
| Discount rate | 10.3% | 9.1% | -1.3pp |
Live formulas, not pasted numbers - edit a driver and the workbook reprices.
Yahoo Finance and RBA data. General information, not advice. Methodology.