Dr Reddy’s share price: Canada notice, Q2 FY26 update

What moved the stock

Dr Reddy’s Laboratories has seen sharp, news-led moves over the past few quarters, with regulatory headlines and quarterly margin commentary shaping near-term sentiment. In one snapshot of daily trading, the stock was reported down 1.83% from a previous close of ₹1,281.70 to ₹1,258.30. Separately, during the October 30, 2025 session, shares fell nearly 6% and were cited trading around ₹1,207, after touching an intraday low of ₹1,180.90, versus a previous close of ₹1,250.90.

A separate market update for October 27 also flagged a softer opening after quarterly results, with the stock trading around ₹1,270 on the NSE against a previous close of ₹1,283.6. Another report, tied to the company’s third-quarter results release, noted that the stock fell up to 6% in early trade and was trading 4.35% lower at ₹1,233.25 on the BSE at around 9:46 am.

Snapshot of recent returns (as reported)

Different trackers in the provided data show different windows and reference dates, so return numbers are best read as “as reported” rather than a single reconciled series. One table of returns showed a one-day move of -1.83%, one-week return of 0.4%, and one-month return of -2.18%. It also listed longer-term returns of 9.97% (1 year), 37.74% (3 years), and 39.25% (5 years).

A separate performance summary around January 14 stated the stock gained ₹1.60, or 0.13%, that day, but had fallen 4.08% over the prior week and 6.85% over the prior month. It also cited a year-to-date decline of 6.22% compared with a 2.16% fall in the Sensex.

Canada semaglutide notice: what the company disclosed

The most market-sensitive trigger in the dataset was the company’s disclosure that it received a Notice of Non-Compliance from Canada’s Pharmaceutical Drugs Directorate. The notice related to the Abbreviated New Drug Submission (ANDS) for semaglutide injection and requested additional information and clarifications on specific aspects of the submission.

Semaglutide injection, as described in the material, is positioned as a generic version of Novo Nordisk’s Ozempic and Wegovy, used for diabetes and weight management. The immediate investor concern reflected in the summaries was that a regulator’s request for further information can push out timelines and increase uncertainty on the launch sequence.

Brokerages on launch timing and potential revenue impact

JP Morgan and Emkay Global, as cited in the provided text, expected the Canada regulatory setback to delay the launch beyond the earlier plan of January 2026. The same summary said this could weaken the first-mover advantage in Canada.

Those analysts also estimated the delay could affect projected revenues of about $10 million for FY2026 and $100 million for FY2027. These figures were presented as projections tied to timing risk, not confirmed revenue outcomes.

Quarterly performance: India filings versus US listing commentary

On the India results side, the dataset reported Q2 FY26 sales rising 10% year-on-year to ₹8,828 crore versus ₹8,038 crore a year earlier. It also cited EBITDA declining 3% year-on-year to ₹2,010 crore, with net profit reported as ₹1,337 crore (down 0.4% year-on-year) and EPS at ₹16.14 (up from ₹15.05).

A separate earnings write-up on the same quarter described consolidated net profit rising 7% year-on-year to ₹1,347.1 crore, short of a ₹1,450 crore brokerage estimate, while revenue from operations grew nearly 10% to ₹8,828 crore. The same report pointed to North America sales falling 13% to ₹3,241 crore due to pricing pressure and lower lenalidomide volumes, while India revenue rose 13% year-on-year and Europe revenue surged 138%.

For the October-December quarter in another summary, Dr Reddy’s reported net profit up 2% year-on-year to ₹1,413 crore and revenue up 16% year-on-year to ₹8,359 crore. That note added EBITDA margin fell to 27.5% from 29.3% a year ago, attributing pressure to US pricing and falling Revlimid revenue.

In US market commentary tied to NYSE: RDY, one report said Dr Reddy’s posted Q3 EPS of $1.16 in line with expectations, with 4.4% revenue growth, reported EBITDA margin of 23.5% (24.8% adjusted for a one-time new labour-code provision) and net cash surplus of $142 million. Another snippet stated EPS of $1.19 versus a $1.18 estimate, on revenue of $1,000 million versus $144.26 million expected, with net margin at 16.99% and trailing twelve-month ROE at 17.25%.

Cost structure and profitability indicators mentioned

From consolidated financials for the year ending March 31, 2025, the dataset stated the company spent less than 1% of operating revenues on interest expense and 17.09% on employee cost. In profitability metrics, one section cited an average ROE of 15.78% and “current ROE” around 16, while another cited ROE of 17.13% and net margin of 17.14%.

The same material also flagged working-capital pressures in September 2025, with inventory turnover and debtors turnover described at historically low levels of 0.47 times and 0.35 times, respectively. It also cited a dividend payout ratio of 11.80%, and a dividend yield of 0.49% (noted as in the bottom 25% among dividend-paying stocks in that dataset). Another sentiment datapoint said short interest decreased 3.21% versus the previous month.

What brokerages said: targets and key concerns

Brokerage views in the provided text were mixed, largely reflecting the trade-off between near-term US pricing pressure and medium-term pipeline and launch optionality.

• Jefferies maintained an ‘Underperform’ rating and cut its target price to ₹1,170 from ₹1,210, citing weakness in core profitability, incremental competition in top products, and higher selling expenses. It also noted stronger performance in Russia and the UK versus weak US and core India sales, and reduced FY26-FY27 EPS estimates by 3-6%.
• Nuvama maintained a ‘Buy’ rating with a target price of ₹1,533 (revised from ₹1,553). It flagged a quarter-on-quarter dip in US revenue due to competition and noted Q3 FY25 marked consolidation of the nicotine replacement therapy (NRT) business. It cited adjusted EBITDA margin of 25.6% and described valuation at 21x FY27E as attractive, while stressing the importance of approvals.
• DAM Capital maintained a ‘Neutral’ rating with a target price of ₹1,331, pointing to soft base profit excluding gRevlimid and noting management guidance to rationalise selling and R&D expenses if major launches underdeliver.
• HSBC maintained a ‘Hold’ rating with a target of ₹1,250, stating that semaglutide in Canada in early 2026 might help but may not fully offset the expected loss of Revlimid revenue.
• JM Financial set a target of ₹1,753 and argued the market may be underestimating semaglutide’s potential, citing a planned launch across Canada and 18 other markets by CY26.

Revlimid risk and the search for replacement drivers

The data repeatedly referenced Revlimid (lenalidomide) as a major recent growth driver but also a source of uncertainty as its contribution has been declining. One summary noted patent expiry set for January 2026, reinforcing the need for new revenue streams.

This context explains why semaglutide timelines and other launches have become central to the investment debate. It also explains why quarterly commentary on North America performance and pricing pressure has had an outsized impact on near-term share moves.

Key data table (as reported)

Why this matters for investors

The combined set of updates highlights a familiar pattern in large Indian pharma: fundamentals can remain resilient while the stock reacts sharply to regulatory timelines, US pricing, and product concentration risk. The Canada notice matters because it introduces uncertainty around launch sequencing for a high-profile molecule, and some analysts explicitly linked it to potential FY26-FY27 revenue deferrals.

At the same time, the quarterly numbers in the dataset show revenue growth but uneven profitability, with margin pressure linked to US dynamics and a changing product mix. Management commentary cited double-digit growth aided by the NRT acquisition, new launches, and operational efficiencies, while also reiterating the company’s stated focus on access, affordability, and innovation.

Conclusion

Dr Reddy’s share moves in the provided reports were driven by two threads: regulatory timing risk for semaglutide in Canada and pressure on North America-led margins amid changing contributions from Revlimid. Near-term direction, as reflected in brokerage notes, depends on the pace of approvals and launch execution, alongside how quickly the company can stabilise profitability while key product contributions evolve.