BackFIIs buy Dr Reddy’s shares for 4 consecutive quarters: Should you buy?
A large cap firm that operates in the pharmaceutical industry is Dr Reddy's Laboratories.
PremiumA large cap firm that operates in the pharmaceutical industry is Dr Reddy's Laboratories. Leading global pharmaceutical corporation Dr. Reddy's Laboratories is headquartered in India and provides business globally in the areas of active pharmaceutical ingredients (API), generics, branded generics, biosimilars, and other pharmaceutical products.
For Foreign institutional investors (FIIs), the shares of Dr Reddy's Laboratories is a sweet spot as they have seen raising stake for 4 consecutive quarters. The FIIs' stake in Dr. Reddy's Laboratories was 25.16% during the quarter that ended in March 2022, 25.87% during the quarter that ended in June 2022, 26.26% during the quarter that ended in September 2022, and 27.29% during the quarter that ended in December 2022, or Q3FY23. During the quarter ended December 2022 or Q3FY23, Dr. Reddy's Laboratories recorded a promoter stake of 26.69%, DIIs stake of 23.38%, public stake of 22.36% and other stakes of 0.25%.
According to Trendlyne data, promoters' holdings in Dr. Reddy's Laboratories dropped from 26.71% in the September 2022 quarter to 26.70% in the December 2022 quarter, while FII/FPI holdings went up from 26.26% in the Q2FY23 to 27.29% in the Q3FY23, the number of FII/FPI investors grew from 740 to 784, mutual funds' holdings have diminished from 12.84% to 10.94% and stake of institutional investors grew up from 61.03% during Q2FY23 to 61.20% in Q3FY23.
The brokerage firm ICICI Direct Research has picked up Dr Reddy's Laboratories as its techno funda stock and has set a target price of ₹5390.00 with a target frame of three months.
The research analysts of the brokerage said “Nifty Pharma, after 20 months of corrective decline, is witnessing buying demand from the long term 200 week’s EMA and is showing signs of end of corrective phase, thus offering a favourable risk reward set up in most pharma stocks. Within the pharma space, we remain constructive on Dr Reddy’s as it recently generated a breakout above the triangular consolidation of last 15 months, signalling resumption of up move and offering a fresh entry opportunity."
Commenting on the technical outlook of Dr Reddy’s, the research analysts of ICICI Direct Research said “The stock recently witnessed a faster retracement of the last falling segment as it retraced 18 week’s decline ( ₹4645-4297) in just five weeks. A faster retracement in less than half the time interval signals strength and a robust price structure. We expect the stock to extend its up move after the long term breakout and head towards ₹5390 levels in the coming months as it is the 123.6% external retracement of the major breather ( ₹5077-3654)."
Commenting on the fundamental outlook, they said “We remain positive on the company’s growth story based on 1) ramp up across geographies on the back of new launches in complex generics, 2) strong FCF generation, which will be driven by gRevlimid and other niche launches, 3) calibrated cost approach based on its better product mix."
The shares of Dr. Reddy's Laboratories hit a fresh 52-week-high of ₹4,940.00 during the morning deals today and were last seen on the NSE at ₹4,917.05 apiece level.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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