Dr Reddy's Labs: What Nomura says on niche HRT segment foray; target price

Nomura in a fresh note said Dr Reddys Laboratories Ltd (DRL) has been acquiring niche assets and is aiming to scale them up through leveraging their existing infra and deriving cost synergies. It estimated that DRL's acquisitions over the past five years would contribute around one-quarter of the company’s revenues in FY26.

The foreign brokerage highlighted DRL's foray into the niche hormone replacement therapy (HRT) segment and said these acquisitions are earnings- and value-accretive for the company. The brokerage retained its 'Buy' rating on DRL and suggested a target price of Rs 1,600 on the stock.

On February 18, Dr Reddy’s announced acquisition of the trademarks of specialty brands Progynova and Cycloprogynova and related assets, for India from Mercury Pharma Group Limited, a UK headquartered specialty pharma company, for $32.15 million.

Nomura said the HRT market is underpenetrated in India and presents scope for sustainable growth over time.

It said Progynova (estradiol valerate) is an oral hormone replacement therapy indicated for the treatment of estrogen deficiency symptoms and for the prevention of postmenopausal osteoporosis. CycloProgynova (estradiol valerate and norgestrel), on the other hand, is a combined hormone replacement therapy indicated for the treatment of estrogen deficiency symptoms, providing both estrogen and progestogen components.

Nomura said Progynova ranked top brand in the estradiol represented pharmaceutical market (RPM), with strong physician equity and brand recall in India. As per IQVIA MAT December 2025, the brand recorded sales of Rs 100 crore, implying a 2.9 times EV/sales multiple for the deal.

"Dr Reddy’s has been expanding its domestic portfolio through acquisitions, in-licensing and partnerships. These inorganic tuck-ins are part of Dr Reddy’s domestic growth strategy. The company acquires niche assets and then aims to scale them up through leveraging their existing infra and deriving cost synergies," it said.