We hosted Dr. Reddy’s Laboratories’ (DRL) in our ESG conference. The enterprise was represented by Mr Parag Agarwal (CFO), Mr Thakur Pherwani (Head SHE & Sustainability) and Mr Amit Agarwal (Head – Investor Relations). The enterprise has been capable to show improvement on ESG front more than previous ten years and has set numerous targets for close to to lengthy term to increase it additional.
Key takeaways from the meeting:
Dr Reddy’s adopted environmental commitment in FY10 with specific targets for FY20. It has been capable to carry out improved than earlier target on precise water consumption, waste reduction and hazardous waste to landfills. However, it fell brief of target on precise power consumption, raise in share of renewable power and water neutrality. Though, the enterprise has been capable to increase on all the above parameters more than the years but couldn’t attain target on couple of elements.
The target for minimizing precise power consumption was 31% and enterprise could attain 22% reduction. The share of renewable power elevated by 8.8% vs target of 16.2% and attained 72% water neutrality vs target of one hundred%.
The enterprise aligns with FTSE4GOOD, CDP, UN Global Compact, Dow Jones Sustainability Indices and Science based targets for ESG objective and has received numerous awards at different summits and events.
The company’s focus has been on providing very affordable & revolutionary medicines, environmental management, becoming an employer of selection, duty for solution and caring for communities.
The enterprise has set target of attaining one hundred% waste circularity like plastic (India) by the year 2023. Over medium term by 2025, it is hunting for 50% renewable power, one hundred% water neutrality and one hundred% waste circularity like plastic.
On social front, it has all round diversity of 18% amongst personnel with 14.8% girls in the management position. The focus remains on neighborhood contributions, overall health & wellbeing of personnel and sustainable provide chain.
Transparency and integrity defines the governance at Dr Reddy’s and the essential strengths are Board structure & effectiveness with 10 directors, 2 executive directors and 8 independent directors, ethics & compliance with no incidences of bribery & corruption, and threat management.
Valuations and dangers: We stay positive on the stock thinking of the development momentum in branded generics small business (India & EMs) and new launches in US to continue supporting development. DRL has launched Sputnik V vaccine in India which would provide important upside to earnings in close to term. We preserve ADD rating on the stock with a target price tag of Rs5,848/share based on 25xFY23E EPS, an extra Rs330/share for Revlimid and NPV of Rs144 for Sputnik V vaccine. Key downside dangers: delay in launching new items, regulatory hurdles and currency volatility.