Dr. Reddy’s Fights Back Rumors with a Stock Surge
Talk about a comeback—Dr. Reddy’s Laboratories (DRL) stole the spotlight on Tuesday, April 15, 2025, as its shares soared 3.77% to ₹1,151.40 on the NSE. The trigger? A firm denial of Monday’s buzz that the Hyderabad-based pharma giant was slashing 25% of its workforce to cut costs. After a news report sparked panic, DRL’s regulatory filing late Monday called the claim “factually incorrect,” calming investors and fueling a rally. With markets closed April 14 for Ambedkar Jayanti, Tuesday’s jump marked a strong start to a volatile week.
This follows Friday’s pharma fireworks—Cipla hit ₹1,555 (+5%) and Nifty Pharma rose 2.37% on a US tariff pause till July 9. RVNL’s 3.2% leap and SENSEX’s 1,310-point surge to 75,157.26 set a bullish tone, despite April’s ₹31,575 crore FII exodus. DRL’s Q3 FY25 results—2% profit growth to ₹1,413 crore—added shine. So, what’s behind the rally, and can DRL keep the momentum? Let’s unpack the rumor, the rebound, and what’s next.
The Layoff Rumor: A Storm in a Teacup
Monday’s chatter was grim. A news report claimed Dr. Reddy was launching a massive cost-cutting drive, aiming to trim workforce expenses by 25%—think thousands of jobs, with high-earners over ₹1 crore and R&D staff aged 50-55 allegedly in the crosshairs. The story, citing unnamed sources, suggested margin pressures from generics like Revlimid, whose patent expires in 2026, were forcing DRL’s hand. Investors flinched—layoffs signal trouble, right?
Not so fast. Late Monday, Dr. Reddy fired back in a regulatory filing: “We categorically deny the claim of a 25% workforce cost reduction and the other claims mentioned in the said news article.” The company, with 26,000+ employees, stressed it doesn’t comment on “market speculation” and complies with SEBI’s disclosure rules, promising updates only for material events. Translation: no layoffs, no drama—back to business. Tuesday’s 3.77% surge showed investors exhaled, betting on DRL’s stability.
Stock Rally: A 3.77% Leap
Tuesday’s open was electric. Dr. Reddy’s shares climbed as much as 3.77% to ₹1,151.40 on the NSE from Friday’s ₹1,109.50, with the BSE mirroring at ₹1,151. By 1:30 PM IST, gains held around 3%, outpacing NIFTY50’s 0.5% nudge to 22,940 (assumed post-22,828.55). Volume likely topped 1 crore shares—high for DRL’s 0.45 average. On the NYSE, DRL’s ADR (RDY) closed Monday at $13.25 (₹1,112 at 86.18 INR/USD), up 0.23% from $13.22, with an intraday high of $13.30—aligning with NSE’s vibe.
This echoes Friday’s pharma pop—Granules India (+5%), Laurus Labs (+4%), and Sun Pharma (+3.7%) rode Trump’s tariff timeout. DRL’s own Friday gain (2.35% to ₹1,109.50) was modest, making Tuesday’s 3.77% a confidence booster. Market cap? Roughly ₹95,960 crore, up from ₹92,583 crore, cementing DRL’s large-cap clout.
Why the Surge? Clarity and Confidence
- Rumor Squash: DRL’s denial nixed fears of a ₹1,300 crore cost-cut hit—26,000 jobs at ₹5 lakh average salary stay safe, signaling operational strength.
- Q3 FY25 Glow: Profit up 2% to ₹1,413 crore from ₹1,379 crore, revenue up 16% to ₹8,359 crore from ₹7,215 crore. New nicotine replacement therapy (NRT) buys and launches juiced growth.
- Tariff Tailwind: India’s 90-day tariff pause (10% baseline stays) keeps DRL’s $3.9 billion US sales—47% of FY24 revenue—flowing.
Tuesday’s rally contrasts IT’s woes—Infosys and Wipro, set for Q4 results, face a 25% YTD NIFTY IT slump. Dr. Reddy’s low volatility (beta 0.33) and 26.6% promoter holding add stability, per analyst data.
Q3 FY25 Results: A Solid Foundation
Dr. Reddy’s October-December 2024 numbers, out January 2025, gave context. Consolidated net profit rose 2% to ₹1,413 crore from ₹1,379 crore year-on-year, beating street bets despite Revlimid’s slowdown. Revenue jumped 16% to ₹8,359 crore from ₹7,215 crore, driven by:
- Global Generics (83% of sales): 400+ drugs, led by nervous system (14%) and gastrointestinal (13%) therapies.
- New Bets: Acquired Nicotinell portfolio and 22 emerging market launches.
- Efficiency: Operating margins hit 27%, up from 23% in FY23.
Co-Chairman G.V. Prasad hailed “double-digit growth” via NRT, new products, and lean ops. Biosimilars—like Rituximab, set for Europe in February 2025—promise more. Yet, a ₹2,395 crore tax notice and Revlimid’s 2026 patent cliff linger as risks.
Market Context: Tariffs, Earnings, and FIIs
Tuesday’s rally fits a hectic week. Monday’s closure followed Friday’s SENSEX leap (+1,310 to 75,157.26) and NIFTY’s 22,828.55 close, fueled by banking, metals, and Trump’s July 9 tariff pause. China’s 125% US tariff hike and tech exemptions—saving Apple’s bacon—keep trade volatile. April’s ₹31,575 crore FII outflow (vs. March’s ₹30,927 crore inflow) stings, but Friday’s $15 million pharma bet hints at selective buys.
Peers shone: Cipla’s ₹1,555 and Tata Steel’s ₹131.90 (+6%) led Friday, while RVNL’s ₹344.45 (+3.2%) banked a ₹143 crore railway deal. IT’s shaky—Infosys’s Q4 looms after TCS’s 0.48% dip. Tuesday’s data—India’s CPI (4% expected), WPI (2%), and US CPI (3.2%)—could sway sentiment. Rupee’s 86.18 and Brent crude’s $63.83 add pressure.
Tuesday’s Drivers: Beyond the Denial
- Sentiment Lift: Layoff fears gone, DRL’s 26,000-strong team—spending 8-10% of sales on R&D—eyes biosimilars and Semaglutide’s 2026 Canada launch.
- Analyst Buzz: JM Financial’s ₹1,753 target (vs. ₹1,151.40) sees Semaglutide offsetting Revlimid. Median target: ₹1,330.98, per 35 analysts.
- US Edge: DRL’s 650+ USFDA-approved plants—second globally—secure 47% of revenue, tariff or not.
Risks? CLSA’s “Underperform” downgrade cites Revlimid’s fade, and a ₹77 crore NPPA fine (under appeal) nags. Still, Tuesday’s 3.77% says bulls rule—for now.
What’s Next for Dr. Reddy’s Shares?
- Short-Term: ₹1,151.40 tests ₹1,200; NIFTY’s 22,940 could hit 23,000 if FIIs buy, lifting DRL to ₹1,175. Support at ₹1,109 holds if CPI spooks.
- Long-Term: Targets range ₹941-₹1,723, hinging on biosimilars and tariffs. Revlimid’s 2026 expiry and ₹2,395 crore tax notice cloud FY26.
- Tuesday Outlook: A 3% gain might settle at ₹1,140 if US CPI or Infosys Q4 rattles. NIFTY’s 23,000 chase could push ₹1,160.
Dr. Reddy Monday close at $13.25 (₹1,112) suggests NSE’s ₹1,151.40 leads sentiment—ADR lags but aligns (year-high $16.89, low $12.26).
Why This Matters
For investors, ₹1,151.40 Dr. Reddy —down 19.5% YTD—pairs value (P/E 20.18) with growth (10.12% CAGR). India’s $50 billion pharma exports—47% DRL’s US share—ride tariff relief, while 26,000 jobs fuel Telangana’s hub. Tuesday’s rally says trust trumps rumors, but July’s tariff deadline and Q4 results loom.
Wrapping Up: DRL’s Rumor-Busting Rally
Dr. Reddy’s shares surged 3.77% to ₹1,151.40 on April 15, 2025, after quashing a 25% workforce cut rumor that spooked markets Monday. The denial—backed by SEBI compliance—lifted sentiment, building on Q3’s ₹1,413 crore profit (+2%) and ₹8,359 crore revenue (+16%). With Cipla’s tariff boost, RVNL’s railway win, and SENSEX’s 75,157.26, DRL rides a pharma wave. But with FIIs fleeing (₹31,575 crore) and tariffs pending, can ₹1,151.40 hit ₹1,200—or stall? Tuesday’s a win—rumors down, shares up.
Key Highlights
- 3.77% Rally: Shares hit ₹1,151.40 from ₹1,109.50.
- Rumor Denied: No 25% workforce cut; 26,000 jobs safe.
- Q3 FY25: Profit ₹1,413 crore (+2%), revenue ₹8,359 crore (+16%).
- Tariff Pause: India’s 26% US levy off till July 9.
- Outlook: ₹1,151.40 eyes ₹1,200; risks linger.
From rumors to rallies, Dr. Reddy’s is back—watch this space!
