February 15, 2024
Top 10 Stock Dr. Reddy's Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Dr. Reddy's – Top 10 Stock in Nifty 50 India Index CNX Nifty 50
Dr. Reddy's is listed as a top 10 stock on February 15, 2024 in the market index CNX Nifty 50 because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 80 (top 80% performer), Obermatt assesses an overall strong buy recommendation for Dr. Reddy's on February 15, 2024.
Snapshot: Obermatt Ranks
| Country | India |
| Industry | Pharmaceuticals |
| Index | Good Governace Growth Markets, Independent Boards Growth Markets, Low Waste, Recycling, CNX Nifty 50 |
| Size class | Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Dr. Reddy's Strong Buy
| 360 METRICS | February 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 67 |
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| GROWTH | ||||||||
| GROWTH | 37 |
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| SAFETY | ||||||||
| SAFETY | 59 |
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| SENTIMENT | ||||||||
| SENTIMENT | 94 |
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| 360° VIEW | ||||||||
| 360° VIEW | 80 |
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ANALYSIS: With an Obermatt 360° View of 80 (better than 80% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Dr. Reddy's are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for Dr. Reddy's. The consolidated Value Rank has an attractive rank of 67, which means that the share price of Dr. Reddy's is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 67% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 59. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 94. But the consolidated Growth Rank has a low rank of 37, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 63 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 80, Dr. Reddy's is better positioned than 80% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 67), secure financing practices (Safety Rank of 59), and positive market sentiment in the professional investor community (Sentiment Rank of 94). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 37), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of Dr. Reddy's is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for Dr. Reddy's very positive
ANALYSIS: With an Obermatt Sentiment Rank of 94 (better than 94% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Dr. Reddy's is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Dr. Reddy's. Analyst Opinions are at a rank of 30 (worse than 70% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 92, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Dr. Reddy's. Even better, the Professional Investors rank is 83, meaning that professional investors hold more stock in this company than in 83% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 87, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 87% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 94 (more positive than 94% compared with investment alternatives), Dr. Reddy's has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: Dr. Reddy's Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 67 (better than 67% compared with alternatives), Dr. Reddy's shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Dr. Reddy's. Price-to-Sales (P/S) is 61, which means that the stock price compared with what market professionals expect for future sales is lower than for 61% of comparable companies, indicating a good value regarding Dr. Reddy's's revenue size. The same is valid for expected Price to Profits (or Price / Earnings, P/E), more favorable than for 69% of alternatives, and it's also true for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 59. But, compared with other companies in the same industry, dividend yields are expected to be lower than average; only 41% of all competitors have even lower dividend yields than Dr. Reddy's (a Dividend Yield Rank of 41). 59% alternative investments in the same business provide a higher dividend yield. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 67, is a buy recommendation based on Dr. Reddy's's stock price compared with the company's operational size and dividend yields. The below-average dividend yield may be a good sign, as it could mean the company has more attractive investment opportunities for the generated cash than to pay it out as dividends. A low dividend yield can also indicate a growth phase. ...read more
Growth Strategy: Dr. Reddy's Growth Momentum low
| GROWTH METRICS | February 15, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 14 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 55 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 55 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 65 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 37 |
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ANALYSIS: With an Obermatt Growth Rank of 37 (better than 37% compared with alternatives), Dr. Reddy's shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Dr. Reddy's. Profit Growth has a rank of 55 which means that currently professionals expect the company to grow its profits more than 55% of its competitors. The same is valid for capital growth and stock returns. Capital Growth has a rank of 55, and Stock Returns has a rank of 65 which means that the stock returns have recently been above 65% of alternative investments. Only revenue growth is low with a Sales Growth has a rank of 14 (86% of its competitors are better). ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 37, is a hold recommendation for growth and momentum investors. The many positive growth indicators indicate a positive growth momentum with only low revenue growth. That can also be attributed to divestments or the sale of unprofitable businesses. If that is the reason, overall growth is well on track to making this stock attractive for growth investors. ...read more
Safety Strategy: Dr. Reddy's Debt Financing Safety above-average
| SAFETY METRICS | February 15, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 59 |
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| REFINANCING | ||||||||
| REFINANCING | 72 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 52 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 59 |
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ANALYSIS: With an Obermatt Safety Rank of 59 (better than 59% compared with alternatives), the company Dr. Reddy's has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Dr. Reddy's is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Dr. Reddy's. Leverage is at 59, meaning the company has a below-average debt-to-equity ratio. It has less debt than 59% of its competitors. Refinancing is at a rank of 72, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 72% of its competitors. Finally, Liquidity is also good at a rank of 52, which means that the company generates more profit to service its debt than 52% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 59 (better than 59% compared with alternatives), Dr. Reddy's has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Dr. Reddy's Above-Average Financial Performance
| COMBINED PERFORMANCE | February 15, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 67 |
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| GROWTH | ||||||||
| GROWTH | 37 |
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| SAFETY | ||||||||
| SAFETY | 52 |
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| COMBINED | ||||||||
| COMBINED | 57 |
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ANALYSIS: With an Obermatt Combined Rank of 57 (better than 57% compared with investment alternatives), Dr. Reddy's (Pharmaceuticals, India) shares have above-average financial characteristics compared with similar stocks. Shares of Dr. Reddy's are a good value (attractively priced) with a consolidated Value Rank of 67 (better than 67% of alternatives), are safely financed (Safety Rank of 59, which means low debt burdens), but show below-average growth (Growth Rank of 37). ...read more
RECOMMENDATION: A Combined Rank of 57, is a buy recommendation based on Dr. Reddy's's financial characteristics. As the company Dr. Reddy's's key financial metrics exhibit good value (Obermatt Value Rank of 67) but low growth (Obermatt Growth Rank of 37) while being safely financed (Obermatt Safety Rank of 59), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 67% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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