Dr Reddy's shares: Nuvama sees Abatacept approval, semaglutide relaunch as key triggers; retains 'Buy'

Nuvama Institutional Equities has retained its 'Buy' rating on Dr Reddy's Laboratories Ltd with a one-year target price of Rs 1,365, saying approval for the company's rituximab biosimilar has improved the likelihood of a near-term nod for its Abatacept biosimilar.

The domestic brokerage said the recent US Food and Drug Administration (USFDA) approval for rituximab is a positive development as the drug was filed from Dr Reddy's Bachupally biologics facility.

"Dr Reddy's has announced USFDA approval for its rituximab biosimilar. This is a positive development as the drug is filed from its Bachupally biologics facility and lifts odds of approval for the Abatacept biosimilar," Nuvama said in a recent note.

According to the brokerage, the Bachupally unit underwent a pre-license inspection (PLI) by the USFDA in June 2026, resulting in seven observations. However, the approval for rituximab from the same facility suggests compliance with the regulator's requirements.

"Approval to rituximab from the same facility indicates that the Bachupally unit is compliant as per FDA's guidelines. Post the approval, we believe there is a high probability for approval of Dr Reddy's Abatacept in the near term. Note that the agency has accepted Dr Reddy's BLA filing in Feb-26," Nuvama said.

The brokerage noted that the facility had also undergone inspections in October 2023 and September 2025, both of which resulted in observations. It believes the latest approval suggests that the June 2026 observations have been addressed.

"There were earlier inspections with observations in Oct-23 and in Sep-25. The rituximab clearance implies that the FDA is sufficiently satisfied about the facility to approve the drug, which we think also means that the Jun-26 observations are addressed successfully. Rituximab can now lead to Abatacept approval. Abatacept has the agency's goal date sometime in Dec-26," it added.

Nuvama said approval for Abatacept and the relaunch of semaglutide remain the key near-term catalysts for the stock.

On semaglutide, the brokerage said the recent validation setback should be viewed as a temporary, process-related issue rather than a structural concern, noting that demand remains strong and the company's EBITDA margin trajectory is intact.

At the same time, it highlighted key risks to its investment thesis, including delays in approvals for complex products, higher-than-expected price erosion and competition in the US market, failure to secure approvals for biosimilars, delays in ramp-up of the proprietary pipeline and currency fluctuations.

Separately, YES Securities, in a note released last month, said Dr Reddy's US business performed better than expected in the June quarter, while its businesses outside the US also remained resilient, supported in part by currency tailwinds.

The brokerage, however, lowered its semaglutide revenue estimates to $130 million for FY27 from over $200 million earlier, and to $195 million for FY28.

"We have cut Sema revenue estimate from >$200mn to $130mn in FY27 and $195mn in FY28. Assigned an unchanged 22x PE on FY28E EPS, which, while lower than that of peers like Sun, considers the uncertainty in ex-Revlimid US business; while FY27 EPS undergoes a sharp cut, likelihood of Semaglutide support in following year results in 14 per cent cut to FY28 EPS. Our revised TP stands at Rs 1,350," YES Securities said, while keeping its 'Add' call.