DR. REDDY'S LABORATORIES-ADR (RDY) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:RDY - US2561352038 - ADR
13.68 USD
-0.03 (-0.22%)
13.41 USD
-0.27 (-1.97%)
Overall RDY gets a fundamental rating of 6 out of 10. We evaluated RDY against 190 industry peers in the Pharmaceuticals industry. While RDY belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. RDY has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
- In the past year RDY was profitable.
- In the past year RDY had a positive cash flow from operations.
- RDY had positive earnings in each of the past 5 years.
- RDY had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- Looking at the Return On Assets, with a value of 10.62%, RDY belongs to the top of the industry, outperforming 91.58% of the companies in the same industry.
- Looking at the Return On Equity, with a value of 16.03%, RDY belongs to the top of the industry, outperforming 88.95% of the companies in the same industry.
- RDY's Return On Invested Capital of 13.03% is amongst the best of the industry. RDY outperforms 92.11% of its industry peers.
- RDY had an Average Return On Invested Capital over the past 3 years of 15.26%. This is above the industry average of 12.83%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.62% | ||
| ROE | 16.03% | ||
| ROIC | 13.03% |
ROA(3y)13.25%
ROA(5y)10.88%
ROE(3y)18.65%
ROE(5y)15.68%
ROIC(3y)15.26%
ROIC(5y)13.95%
1.3 Margins
- RDY has a better Profit Margin (16.82%) than 88.95% of its industry peers.
- RDY's Profit Margin has improved in the last couple of years.
- RDY's Operating Margin of 19.62% is amongst the best of the industry. RDY outperforms 86.84% of its industry peers.
- RDY's Operating Margin has improved in the last couple of years.
- The Gross Margin of RDY (66.88%) is better than 75.79% of its industry peers.
- RDY's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.62% | ||
| PM (TTM) | 16.82% | ||
| GM | 66.88% |
OM growth 3Y9.42%
OM growth 5Y4.7%
PM growth 3Y19.59%
PM growth 5Y8.42%
GM growth 3Y2.12%
GM growth 5Y0.39%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), RDY is creating some value.
- Compared to 1 year ago, RDY has about the same amount of shares outstanding.
- RDY has more shares outstanding than it did 5 years ago.
- RDY has a worse debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 5.67 indicates that RDY is not in any danger for bankruptcy at the moment.
- With a decent Altman-Z score value of 5.67, RDY is doing good in the industry, outperforming 74.74% of the companies in the same industry.
- The Debt to FCF ratio of RDY is 3.17, which is a good value as it means it would take RDY, 3.17 years of fcf income to pay off all of its debts.
- RDY has a Debt to FCF ratio of 3.17. This is amongst the best in the industry. RDY outperforms 88.95% of its industry peers.
- RDY has a Debt/Equity ratio of 0.03. This is a healthy value indicating a solid balance between debt and equity.
- The Debt to Equity ratio of RDY (0.03) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.03 | ||
| Debt/FCF | 3.17 | ||
| Altman-Z | 5.67 |
ROIC/WACC1.28
WACC10.17%
2.3 Liquidity
- RDY has a Current Ratio of 1.85. This is a normal value and indicates that RDY is financially healthy and should not expect problems in meeting its short term obligations.
- The Current ratio of RDY (1.85) is worse than 64.21% of its industry peers.
- A Quick Ratio of 1.35 indicates that RDY should not have too much problems paying its short term obligations.
- RDY has a Quick ratio of 1.35. This is in the lower half of the industry: RDY underperforms 67.37% of its industry peers.
- RDY does not score too well on the current and quick ratio evaluation. However, as it has 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 | 1.85 | ||
| Quick Ratio | 1.35 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 4.02% over the past year.
- Measured over the past years, RDY shows a very strong growth in Earnings Per Share. The EPS has been growing by 23.62% on average per year.
- Looking at the last year, RDY shows a quite strong growth in Revenue. The Revenue has grown by 11.06% in the last year.
- RDY shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 13.26% yearly.
EPS 1Y (TTM)4.02%
EPS 3Y33.55%
EPS 5Y23.62%
EPS Q2Q%-13.5%
Revenue 1Y (TTM)11.06%
Revenue growth 3Y14.86%
Revenue growth 5Y13.26%
Sales Q2Q%6.11%
3.2 Future
- RDY is expected to show a decrease in Earnings Per Share. In the coming years, the EPS will decrease by -1.42% yearly.
- RDY is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.63% yearly.
EPS Next Y-6.34%
EPS Next 2Y-8.18%
EPS Next 3Y-1.42%
EPS Next 5YN/A
Revenue Next Year5.1%
Revenue Next 2Y3.83%
Revenue Next 3Y5.5%
Revenue Next 5Y6.63%
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- 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
- RDY is valuated rather expensively with a Price/Earnings ratio of 18.74.
- Based on the Price/Earnings ratio, RDY is valued cheaper than 83.16% of the companies in the same industry.
- RDY is valuated rather cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
- RDY is valuated rather expensively with a Price/Forward Earnings ratio of 21.97.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of RDY indicates a somewhat cheap valuation: RDY is cheaper than 76.32% of the companies listed in the same industry.
- RDY is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.74 | ||
| Fwd PE | 21.97 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of RDY indicates a rather cheap valuation: RDY is cheaper than 85.79% of the companies listed in the same industry.
- 77.89% of the companies in the same industry are more expensive than RDY, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 56.64 | ||
| EV/EBITDA | 11.19 |
4.3 Compensation for Growth
- RDY has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.79
EPS Next 2Y-8.18%
EPS Next 3Y-1.42%
5. Dividend
5.1 Amount
- RDY has a yearly dividend return of 0.50%, which is pretty low.
- RDY's Dividend Yield is rather good when compared to the industry average which is at 0.46. RDY pays more dividend than 88.95% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.81, RDY's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.5% |
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 11.54% of its income as dividend. This is a sustainable payout ratio.
- RDY's earnings and Dividend Rate are declining. This means the current dividend is most likely not sustainable.
DP11.54%
EPS Next 2Y-8.18%
EPS Next 3Y-1.42%
DR. REDDY'S LABORATORIES-ADR / RDY FAQ
What is the ChartMill fundamental rating of DR. REDDY'S LABORATORIES-ADR (RDY) stock?
ChartMill assigns a fundamental rating of 6 / 10 to RDY.
What is the valuation status of DR. REDDY'S LABORATORIES-ADR (RDY) stock?
ChartMill assigns a valuation rating of 5 / 10 to DR. REDDY'S LABORATORIES-ADR (RDY). This can be considered as Fairly Valued.
What is the profitability of RDY stock?
DR. REDDY'S LABORATORIES-ADR (RDY) has a profitability rating of 8 / 10.
Can you provide the expected EPS growth for RDY stock?
The Earnings per Share (EPS) of DR. REDDY'S LABORATORIES-ADR (RDY) is expected to decline by -6.34% in the next year.
Is the dividend of DR. REDDY'S LABORATORIES-ADR sustainable?
The dividend rating of DR. REDDY'S LABORATORIES-ADR (RDY) is 4 / 10 and the dividend payout ratio is 11.54%.