Why Dr Reddy's Laboratories shares tumbled over 6% today

Shares of Dr Reddy's Laboratories Ltd slumped in Thursday's trade, sliding 6.49 per cent to hit a low of Rs 1,261.20. The sharp decline came after the company informed stock exchanges that certain batches of semaglutide (weight loss drug) were found to be out of specification due to an issue associated with the active pharmaceutical ingredient (API) used in the product.

"We are investigating the root cause and taking appropriate measures to ensure product quality. Until the issue is resolved, commercial supplies of the product will be delayed for a certain period of time," the pharma major stated.

Dr Reddy's clarified that there is no impact on patient safety or its existing global regulatory filings.

"There is no impact on patient safety or on the product's existing global regulatory filings. We remain committed to ensuring reliable global supplies of this important metabolic therapy," Dr Reddy's added.

The company further said it will host a conference call later in the day to discuss the matter and answer investor queries.

Meanwhile, Choice Institutional Equities expects strong growth visibility for the company, supported by the scale-up of semaglutide and biosimilars.

"Despite headwinds in Q4 FY26, we maintain a positive view on the company as the majority of the impact was one-off in nature. We expect growth to be driven by Semaglutide launch in India, Canada and Brazil (expected in FY27E), with limited competition from Indian players in Canada. Additionally, planned biosimilar launches along with innovative product launches in India should support margin expansion," the brokerage stated.

"Factoring in the one-offs, we revise FY27/28E estimate downwards by 12.5 per cent/10.4 per cent. However, given the company's evolving portfolio mix towards complex generics, biosimilars and innovative products in India, we raise our target multiple by 10 per cent. Our revised TP (target price) stands at Rs 1,335 with an ADD rating. This implies a PEG of 0.7x, reinforcing the attractiveness of valuation," it also said.