DR. REDDY'S LABORATORIES-ADR (RDY) Stock Fundamental Analysis
NYSE:RDY - New York Stock Exchange, Inc. - US2561352038 - ADR - Currency: USD
RDY gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 198 industry peers in the Pharmaceuticals industry. Both the health and profitability get an excellent rating, making RDY a very profitable company, without any liquidiy or solvency issues. RDY has a decent growth rate and is not valued too expensively. With these ratings, RDY could be worth investigating further for quality investing!.
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.
Each year in the past 5 years RDY has been profitable.
Each year in the past 5 years RDY had a positive operating cash flow.
1.2 Ratios
RDY has a Return On Assets of 11.43%. This is amongst the best in the industry. RDY outperforms 93.94% of its industry peers.
RDY's Return On Equity of 16.84% is amongst the best of the industry. RDY outperforms 90.40% of its industry peers.
RDY has a better Return On Invested Capital (14.50%) than 90.91% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.43% | ||
| ROE | 16.84% | ||
| ROIC | 14.5% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
Looking at the Profit Margin, with a value of 17.30%, RDY belongs to the top of the industry, outperforming 90.91% of the companies in the same industry.
In the last couple of years the Profit Margin of RDY has grown nicely.
RDY has a better Operating Margin (21.27%) than 86.36% of its industry peers.
RDY's Operating Margin has improved in the last couple of years.
RDY has a better Gross Margin (69.43%) than 76.77% of its industry peers.
RDY's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.27% | ||
| PM (TTM) | 17.3% | ||
| GM | 69.43% |
OM growth 3Y9.42%
OM growth 5Y4.7%
PM growth 3Y20.08%
PM growth 5Y8.68%
GM growth 3Y3.36%
GM growth 5Y1.12%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so RDY is still creating some value.
RDY has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
An Altman-Z score of 6.15 indicates that RDY is not in any danger for bankruptcy at the moment.
RDY has a Altman-Z score of 6.15. This is amongst the best in the industry. RDY outperforms 83.84% of its industry peers.
RDY has a debt to FCF ratio of 3.89. This is a good value and a sign of high solvency as RDY would need 3.89 years to pay back of all of its debts.
The Debt to FCF ratio of RDY (3.89) is better than 86.87% of its industry peers.
A Debt/Equity ratio of 0.02 indicates that RDY is not too dependend on debt financing.
With a Debt to Equity ratio value of 0.02, RDY perfoms like the industry average, outperforming 57.07% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.02 | ||
| Debt/FCF | 3.89 | ||
| Altman-Z | 6.15 |
ROIC/WACC1.35
WACC10.77%
2.3 Liquidity
RDY has a Current Ratio of 1.92. This is a normal value and indicates that RDY is financially healthy and should not expect problems in meeting its short term obligations.
RDY's Current ratio of 1.92 is on the low side compared to the rest of the industry. RDY is outperformed by 61.11% of its industry peers.
RDY has a Quick Ratio of 1.37. This is a normal value and indicates that RDY is financially healthy and should not expect problems in meeting its short term obligations.
RDY has a Quick ratio of 1.37. This is in the lower half of the industry: RDY underperforms 67.68% 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 | 1.92 | ||
| Quick Ratio | 1.37 |
3. Growth
3.1 Past
RDY shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 0.90%.
Measured over the past years, RDY shows a very strong growth in Earnings Per Share. The EPS has been growing by 23.51% on average per year.
Looking at the last year, RDY shows a quite strong growth in Revenue. The Revenue has grown by 16.54% 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)0.9%
EPS 3Y33.35%
EPS 5Y23.51%
EPS Q2Q%19.98%
Revenue 1Y (TTM)16.54%
Revenue growth 3Y14.86%
Revenue growth 5Y13.26%
Sales Q2Q%19.65%
3.2 Future
RDY is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.57% yearly.
The Revenue is expected to grow by 6.25% on average over the next years.
EPS Next Y7.88%
EPS Next 2Y-7%
EPS Next 3Y3.57%
EPS Next 5YN/A
Revenue Next Year9.19%
Revenue Next 2Y3.97%
Revenue Next 3Y5.63%
Revenue Next 5Y6.25%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 17.90, which indicates a rather expensive current valuation of RDY.
Based on the Price/Earnings ratio, RDY is valued cheaply inside the industry as 84.34% of the companies are valued more expensively.
RDY's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.85.
RDY is valuated correctly with a Price/Forward Earnings ratio of 16.60.
Compared to the rest of the industry, the Price/Forward Earnings ratio of RDY indicates a somewhat cheap valuation: RDY is cheaper than 78.79% of the companies listed in the same industry.
RDY is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 20.89, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.9 | ||
| Fwd PE | 16.6 |
4.2 Price Multiples
83.84% of the companies in the same industry are more expensive than RDY, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of RDY indicates a somewhat cheap valuation: RDY is cheaper than 77.27% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 83.46 | ||
| EV/EBITDA | 10.88 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates RDY does not grow enough to justify the current Price/Earnings ratio.
RDY has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)2.27
PEG (5Y)0.76
EPS Next 2Y-7%
EPS Next 3Y3.57%
5. Dividend
5.1 Amount
With a yearly dividend of 0.66%, RDY is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 4.19, RDY pays a better dividend. On top of this RDY pays more dividend than 89.39% of the companies listed in the same industry.
With a Dividend Yield of 0.66, RDY pays less dividend than the S&P500 average, which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
5.2 History
The dividend of RDY decreases each year by -19.81%.
RDY has paid a dividend for at least 10 years, which is a reliable track record.
RDY has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-19.81%
Div Incr Years4
Div Non Decr Years4
5.3 Sustainability
11.79% of the earnings are spent on dividend by RDY. This is a low number and sustainable payout ratio.
DP11.79%
EPS Next 2Y-7%
EPS Next 3Y3.57%
14.14
+0.04 (+0.28%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupPharmaceuticals, Biotechnology & Life Sciences
GICS IndustryPharmaceuticals
Earnings (Last)
Earnings (Next)
Inst Owners49.75%
Inst Owner Change-3.11%
Ins Owners21.84%
Ins Owner ChangeN/A
Market Cap11.76B
Analysts66
Price Target16.06 (13.58%)
Short Float %2.57%
Short Ratio6.78
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
Yearly Dividend0.09
Dividend Growth(5Y)-19.81%
DP11.79%
Div Incr Years4
Div Non Decr Years4
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-1.04%
Min EPS beat(2)-3.24%
Max EPS beat(2)1.16%
EPS beat(4)2
Avg EPS beat(4)-2.12%
Min EPS beat(4)-13.1%
Max EPS beat(4)6.71%
EPS beat(8)6
Avg EPS beat(8)7.82%
EPS beat(12)10
Avg EPS beat(12)18.06%
EPS beat(16)11
Avg EPS beat(16)9.78%
Revenue beat(2)1
Avg Revenue beat(2)0.19%
Min Revenue beat(2)-0.61%
Max Revenue beat(2)1%
Revenue beat(4)3
Avg Revenue beat(4)1.7%
Min Revenue beat(4)-0.61%
Max Revenue beat(4)3.62%
Revenue beat(8)5
Avg Revenue beat(8)1.02%
Revenue beat(12)8
Avg Revenue beat(12)1.99%
Revenue beat(16)10
Avg Revenue beat(16)1.71%
PT rev (1m)2.32%
PT rev (3m)2.74%
EPS NQ rev (1m)0.31%
EPS NQ rev (3m)0.31%
EPS NY rev (1m)0.13%
EPS NY rev (3m)1.02%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)0.43%
Revenue NY rev (3m)1.1%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.9 | ||
| Fwd PE | 16.6 | ||
| P/S | 3.08 | ||
| P/FCF | 83.46 | ||
| P/OCF | 21.62 | ||
| P/B | 2.99 | ||
| P/tB | 4.45 | ||
| EV/EBITDA | 10.88 |
EPS(TTM)0.79
EY5.59%
EPS(NY)0.85
Fwd EY6.02%
FCF(TTM)0.17
FCFY1.2%
OCF(TTM)0.65
OCFY4.62%
SpS4.6
BVpS4.73
TBVpS3.18
PEG (NY)2.27
PEG (5Y)0.76
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.43% | ||
| ROE | 16.84% | ||
| ROCE | 19.08% | ||
| ROIC | 14.5% | ||
| ROICexc | 17.42% | ||
| ROICexgc | 27.35% | ||
| OM | 21.27% | ||
| PM (TTM) | 17.3% | ||
| GM | 69.43% | ||
| FCFM | 3.69% |
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y9.42%
OM growth 5Y4.7%
PM growth 3Y20.08%
PM growth 5Y8.68%
GM growth 3Y3.36%
GM growth 5Y1.12%
F-Score3
Asset Turnover0.66
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.02 | ||
| Debt/FCF | 3.89 | ||
| Debt/EBITDA | 0.09 | ||
| Cap/Depr | 201.9% | ||
| Cap/Sales | 10.54% | ||
| Interest Coverage | 19.93 | ||
| Cash Conversion | 53.7% | ||
| Profit Quality | 21.3% | ||
| Current Ratio | 1.92 | ||
| Quick Ratio | 1.37 | ||
| Altman-Z | 6.15 |
F-Score3
WACC10.77%
ROIC/WACC1.35
Cap/Depr(3y)179.81%
Cap/Depr(5y)161.03%
Cap/Sales(3y)9.33%
Cap/Sales(5y)8.68%
Profit Quality(3y)47.35%
Profit Quality(5y)60.43%
High Growth Momentum
Growth
EPS 1Y (TTM)0.9%
EPS 3Y33.35%
EPS 5Y23.51%
EPS Q2Q%19.98%
EPS Next Y7.88%
EPS Next 2Y-7%
EPS Next 3Y3.57%
EPS Next 5YN/A
Revenue 1Y (TTM)16.54%
Revenue growth 3Y14.86%
Revenue growth 5Y13.26%
Sales Q2Q%19.65%
Revenue Next Year9.19%
Revenue Next 2Y3.97%
Revenue Next 3Y5.63%
Revenue Next 5Y6.25%
EBIT growth 1Y7.53%
EBIT growth 3Y25.68%
EBIT growth 5Y18.58%
EBIT Next Year29.13%
EBIT Next 3Y9.46%
EBIT Next 5Y20.64%
FCF growth 1Y-33.16%
FCF growth 3Y9.92%
FCF growth 5Y-12.7%
OCF growth 1Y2.19%
OCF growth 3Y18.21%
OCF growth 5Y9.24%